From left: 229 West 43rd Street and Paul Amrich, vice chairman at CBRE

In a down office leasing market, landlords are not only offering more in the way of tenant incentives — such as paying for a tenant’s build out — they are getting more creative about what sorts of incentives to offer, the Wall Street Journal reported.

For instance, at 229 West 43rd Street, landlord Blackstone Group is willing to create outdoor terraces and private entrances and is even considering letting workers bring their dogs to work, the paper said. [more]

229 West 43rd Street

Restaurant company Heartland Group is expanding its presence in the Times Square neighborhood, after signing a nearly 16,000-square-foot lease at the former New York Times Building at 229 West 43rd Street, city property records show.

The Midtown-based company, which operates two large restaurants under the Heartland Brewery and HB Burger names only a block away, signed the new lease Dec. 1 with Africa Israel USA, which owns the retail condominium at the Times Square Building, the records say. [more]

Equity Office, an affiliate of the Blackstone Group, which just purchased the upper 12 floors of the 15-story former New York Times building at 229 West 43rd Street, has turned the publisher’s dining room into a basketball court in an effort to attract prospective tenants, the Times reported.

The real estate giant has been pulling out all the stops to draw positive attention to the building, most of which has been vacant since the Times moved on in 2007. A 12th floor terrace has also been landscaped in Blackstone’s version of the High Line, Josh Glick, the asset manager for Equity Office, joked.
[more]

From left: Blackstone co-founder Stephen Schwarzman, 229 West 43rd Street and Lev Leviev, chairman of Africa Israel

Private equity firm the Blackstone Group has completed its purchase of the top 11 floors of the 15-story former New York Times building at 229 West 43rd Street, according to public records filed with the city this morning.

As The Real Deal previously reported, the deal saw Blackstone pay developer Africa Israel USA and private equity firm Five Mile Capital $160 million for approximately 450,000 square feet of the building, which includes a portion of the fourth floor and floors five through 15.

“We are making a significant real estate contribution to the neighborhood for which we are proud,” Tamir Kazaz, CEO of Africa Israel USA, said in a statement in April about the sale. Kazaz said the company used the proceeds of the sale to pay down a portion of the $265 million first mortgage.
[more]

From left: Lev Leviev, 5 Madison Avenue, 229 West 43rd Street, the Apthorp and the Marquis Miami

If the goal of real estate investors is to buy low and sell high, then, according to the Wall Street Journal, Africa Israel’s U.S. investments have failed miserably. Like Japanese real estate investors that lost big on late 1980s purchases of the Pebble Beach golf resort and Rockefeller Center when a recession hit a few years later, Africa Israel’s purchases of the Clocktower Office Building near Madison Square Park, the former New York Times headquarters on West 43rd Street, the Apthorp on the Upper West Side and the Marquis Miami Condo-Hotel will likely result in big losses. For example, the company is in contract to sell the Clocktower building to Tommy Hilfiger for $170 million, despite paying $200 million for the building and spending millions more to convert it to condominiums. Worse, the company is selling 11 of the 16 floors of the Times headquarters to Blackstone Group for $160 million, despite paying $525 million for the entire building in 2007. [more]

Midtown’s smaller and older Class B buildings have vacancy rates rising and asking rents
declining, bucking the overall positive trend in Manhattan’s largest market, a monthly
report from commercial services firm Cassidy Turley shows.

“I would say that a concern today is the Class B market in Midtown as it is lagging in the
recovery,” said Robert Sammons, vice president of research at Cassidy Turley.

The 70 million square feet of Class B office space in Midtown had a vacancy rate of 15.3
percent in April, up from 14.2 percent in April one year ago. [more]

229 West 43rd Street

Private equity firm Blackstone Group paid $160 million for the top 12 floors of the
old New York Times Building at 229 West 43rd Street, owned by a partnership of
real estate developer Africa Israel USA and private equity firm Five Mile Capital,
the sellers announced in a statement.

Blackstone bought the office condominium comprised of a portion of the 4th floor
as well as floors 5 through 16, Africa Israel said in the statement. The sale closed
this afternoon.

The exact size of the condo was not released, but public records indicate it is
about 600,000 square feet of the 745,000-square-foot building, which would
amount to a price of $267 per square foot. [more]

Lev Leviev is going head-first against Bowlmor Lanes in Times Square

Africa Israel plans to throw a counterpunch after a $32 million lawsuit from its biggest retail tenant, Bowlmor Lanes, which accused the struggling real estate conglomerate of dragging its feet on the buildout of a 70,000-square-foot space at the old New York Times building. Lawyers for the Israeli-based developer, led by billionaire Lev Leviev, said they will file suit in New York State Supreme Court alleging the Manhattan-based bowling alley chain is using some space it is not entitled to, and argues that it provided all the construction funds it was required to in a timely manner. [more]

From left: Lev Leviev, the Bowlmor logo on the old New York Times building, the building at 229 W. 43rd St.

Africa Israel, which is converting the former New York Times building into a mega-hotel and entertainment complex, is facing a $32 million lawsuit from Bowlmor, for allegedly dragging its feet on the company’s new 70,000-square-foot bowling alley at the property and trying to dump millions of dollars in construction costs onto the tenant.

Manhattan-based Bowlmor, in a Jan. 13 lawsuit filed in New York State Supreme Court, alleged that the financially troubled company, led by billionaire Lev Leviev, agreed to contribute $6.7 million towards the $23 million cost to build the bowling alley, but continually delayed and disrupted the renovations because it either didn’t have the money or the expertise to get the job done.

“[Africa Israel] has not been able to sign a lease with any other tenant since the lease was executed and is attempting to procure additional economic concessions from plaintiff so it can avoid foreclosure and loss of the building,” wrote Jeff Klarsfeld, Bowlmor’s attorney, in the complaint. [more]

Discount department store Daffy’s has inked a deal to lease 28,000 square feet in the former New York Times building in Times Square, according to the Wall Street Journal, in a coup for Africa Israel USA, which had been struggling to find tenants there since it purchased the property at the height of the market. Last year, the company changed course at the 750,000-square-foot building, at 229 West 43rd Street, moving to convert it into retail space, a hotel and condominiums instead of attempting to fill it with office tenants. [more]