The Real Deal New York

Spaces inks lease for another big Manhattan co-working spot

Regus sister company takes 99K sf at Georgetown and Bill Ackman’s 787 11th Ave
By Rich Bockmann | September 20, 2018 04:30PM

Adam Flatto, Bill Ackman, and a rendering of 787 11th Avenue (Credit: Getty Images and 787 Eleventh)

Spaces, the co-working firm owned by Regus parent company IWG, just signed another big lease in Manhattan.

The company is taking 99,000 square feet at the former Ford Motor Company building in Hell’s Kitchen at 787 11th Avenue, representatives told The Real Deal. The property is owned by the Georgetown Company and Bill Ackman, the activist investor.

Spaces is taking two floors that include a dramatic, double-height space in the 10-story building between West 54th and West 55th streets.

“The building itself is probably going to be one of the most stunning locations we’ll be in from a standpoint of the natural architecture of the space,” said Michael Berretta, vice president of network development at IWG.

Asking rent for the space was in the high $70s per square foot, according to Adam Flatto, CEO of Georgetown.

“They look at all those residential units that have been built up around [in the neighborhood] and see the potential customers coming in and out of those doors every day,” Flatto said.

A CBRE team of Mary Ann Tighe, Evan Haskell, Ross Zimbalist, Arkady Smolyansky and Benjamin Joseph is handling leasing at the property. Their colleagues Mark Ravesloot, William Iacovelli and Peter Danna represented Spaces.

Park Avenue-based Georgetown teamed up with Ackman to buy the 400,000-square-foot Art Deco building for $255.5 million in 2015.

The developers landed a $349.5 million construction loan from Blackstone Group, and tapped Rafael Viñoly Architects to reposition the building, which boasts large floor plates that stretch out an acre in size.

The team moved employee parking from the top of the building to the basement, and constructed two glass box penthouses and a 12,000-square-foot roof deck.

Auto dealers Jaguar and Land Rover occupy the first five floors. Ackman’s Pershing Square signed a lease for 67,000 square feet in the building, and real estate lender Dwight Capital took another 20,000 square feet.

Flatto said the Spaces location has the added benefit of effectively being “natural expansion space” for the other tenants in the building.

Georgetown and Ackman recently brought on a group of investors including LeBron James and Arnold Schwarzenegger to inject an undisclosed amount of equity into the project.

The owners, Flatto added, will soon be looking for permanent financing for the property.

Spaces, meanwhile, signed a lease last month for a 110,000-square-foot location at the Chrysler Building, the company’s largest in New York City. With the 787 11th deal, Spaces now has five locations here.

“We’re seeing a lot more demand from our corporate enterprise customers,” Berretta said. Because of that, we are looking at larger blocks of space.”

Still, the company as a long way to go to catch up with co-working’s 800-pound gorilla. WeWork on Tuesday announced that with its nearly 260,000-square-foot lease at TH Real Estate’s 21 Penn Plaza, the company is now the largest private office tenant in Manhattan, with about 5.3 million square feet.

(If all of the different New York City departments were counted together, the city government would be the largest tenant.)