Howard Michaels in his office at 560 Lexington Avenue last month.From the October issue: Thirty-four years ago, Howard Michaels was knocking on doors in the 2.3 million-square-foot Starrett-Lehigh office building, hawking copy machines for the 3M Company.

“I was making bupkis,” Michaels recalled.

Those days are undoubtedly over. In 2004, he arranged a $219 million recapitalization of that same building, earning a seven-figure commission for his company, a real estate investment advisory firm known as the Carlton Group.

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FAO Schwarz has ended speculation by finally renewing its lease at Boston Properties’ General Motors building, the New York Post reported. There had been rumors that the Toys “R” Us-owned toy retailer might leave when its lease ended in 2012. Agent Bradley Mendelson of Cushman & Wakefield confirmed the extension.

In March it was reported that Boston Properties and FAO Schwarz had entered arbitration over the rent. Shortly after purchasing the 1.77 million-square-foot building, Boston Properties said FAO Schwarz was not the most financially viable tenant considering the under-market rent it currently pays.

Sources said Mendelson’s team quietly talked to other prospective users if Schwarz decided not to renew. [more]

From the March issue: Although they may be just beguiling mirages that will fade upon approach, there are some submarkets where asking rents have jumped in the past months, a trend that runs counter to the dour predictions from Manhattan leasing brokers that taking rents won’t rise for more than a year.

In the Meatpacking District, for example, Charles Blaichman’s CB Developers High Line building that remains under construction at 450 West 14th Street has asking rents above $100 per square foot. The space was added to the availability list in January, driving up average rates in the district, the most recent figures from commercial firm Jones Lang LaSalle show.

And in the Union Square submarket, the average asking rent rose by 14 percent with the addition of space at 300 Park Avenue South, commercial firm CB Richard Ellis’ latest report said.
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From the February issue: The high volume of leasing in recent months, fueled in part by tenants signing early renewals at sharply reduced prices, could come back to bite the market next year, some industry experts said. Tenants with two and three years remaining on their leases — and sometimes even four years — are signing renewals early, said Bruce Mosler, CEO and co-chairman of commercial services firm Cushman & Wakefield. “We are seeing, I think, a push to market … to take advantage of the capitulations in rents,” he said. “Which I think is creating demand in this market, and I think it will [reduce] demand in ’11 … unless we see some job growth again.” However, some brokers did not expect the same elevated levels this year. “I don’t think January will continue at the same level,” Howard Rosen, regional managing director at commercial firm Grubb & Ellis New York, said in an interview. “As far as I am concerned, the jury is out, and I don’t see job creation in Manhattan.” [more]

From the December issue: A Japanese industrial firm paid $501 per square foot for a Midtown skyscraper known as Tower 49, a price that at the time was the highest ever paid for a Manhattan office building, 22 years ago this month. The company, Kato Kagaku, purchased the 45-story midblock high-rise at 12 East 49th Street, between Fifth and Madison avenues, from the building’s developers for $301 million. The 600,000-square-foot skyscraper was built by David Solomon, G. Ware Travelstead and First Boston on an irregular parcel extending from 48th to 49th Street and opened in 1984. Kato Kagaku, a manufacturer of corn-based products, still owns the building today. The tower is home to a variety of companies, including the corporate offices of retailer Saks Fifth Avenue, financial firm Steinberg Asset Management and the sales office for metal recycling firm Schnitzer Steel Industries. The previous highest price for a major Manhattan office building was the Japanese real estate company Shuwa’s purchase in June 1986 of the American Broadcasting Corporation building at 1330 Sixth Avenue for $175 million, about $365 per square foot.

Brazil’s Banco Itau has signed a 15-year lease for 25,000 square feet on the top floor at the General Motors Building, at 767 Fifth Avenue, between 58th and 59th streets. The lease will take up approximately half a floor. With a rate of more than $130 per square foot, the lease marks the city’s most expensive deal of the year, Crain’s reported. The GM tower is one of a scant few in the city that still rakes in more than $100 per square foot. Others include the Lever House at 390 Park Avenue and the Seagram Building at 375 Park Avenue.

Buildings where deals have been done for over $100 this year. From left: 9 West 57th Street, 152 West 57th Street and 1095 Avenue of the Americas (Source: PropertyShark)

Although the top taking rent so far this year is an eye-popping $185
per square foot at Sheldon Solow’s 9 West 57th Street, it is just one
of only a handful of leases signed for $100 or more per square foot
this year in a challenging leasing environment, industry experts said. New York City landlords signed just 12 leases with taking rents of over
$100 per square foot through July 31, down from 66 at the same time
last year, figures from commercial services firm Cushman &
Wakefield show, an 80 percent drop. “From 66 to 12 is a significant drop off, considering quite a few of
those were renewals of captive tenants,” and most were not for large
deals, said Jonathan Mazur, assistant director of research services for
Cushman & Wakefield. He would not comment on particular deals. Comments

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