From left: SL Green CEO Marc Holliday, 280 Park Avenue (building photo source: PropertyShark), and Vornado Chairman Steven Roth
Vornado Realty Trust and SL Green Realty each has its own large management team charged with day-to-day operations of its portfolio of assets. But the Wall Street Journal reported that when the two firms teamed to take control of 280 Park Avenue, they made the unusual move of hiring an outside firm, CBRE Group, to manage the Midtown office tower, rather than pick between one of its own divisions.
The move to hire CBRE quelled concerns over how the two huge real estate firms would work together on a single asset. Though the Journal said leases at the building do still take longer to close, and the companies reportedly disagreed over which architect to hire (they eventually chose KPF Architects) for the $100 million renovation of the building, SL Green executives said the partnership has worked well.
SL Green and Vornado took over the property earlier this year. The pair held $400 million of debt at the building, and eventually wrestled away control from Broadway Partners, which was beset with debt after it purchased the building for $1.2 billion at the height of the boom.
Now, CBRE has the opportunity to generate significant income for the landlords and a huge commission for itself — about 543,000 square feet could become vacant as Deutsche Bank and the National Football League have deals expiring. CBRE recently inked a deal with Viking Global Investors for 40,000 square feet at $115-per-square-foot, and a similar rate for the soon-to-be vacant space would net the firm a commission of about $9 million. [WSJ]