The lease deal to consolidate NYC Health + Hospitals’ six administrative offices scattered across three boroughs took almost three years to complete, involved four negotiating parties and resulted in $200 million in cost savings for the nonprofit corporation. It also won the team of Newmark Knight Frank brokers REBNY’s Ingenious award.
Newmark’s Brian Waterman, Lance Korman, Ira Rovitz, Romel Cañete and Daniel Keegan won the Henry Hart Rice Achievement Award, the Real Estate Board of New York’s top prize for most innovative deal of the year.
It all started with a request from the nonprofit corporation that operates the city’s public hospitals and health care facilities. The organization needed to combine and make more efficient its six offices that totaled about 350,000 square feet.
But finding a suitable location to house thousands of employees was a challenge because HHC wanted the new location to be close to its administrative headquarters at 55 Water Street. Complicating that, its leases for the smaller offices had different expirations, and the nonprofit could not keep paying rent on those and a new location.
The Newmark team found a solution just across the street from HHC headquarters: The former headquarters of Guardian Life Insurance at 50 Water Street — known as 7 Hanover Square at that time.
But there were problems. The property’s ownership was in flux since Guardian Life exercised its $147 million purchase option at the end of its 20-year lease in 2017. The insurance company intended to buy the850,000-square-foot building from the landlord with the intention of flipping it. Guardian Life then moved on to sublease a smaller space from Coach at its 10 Hudson Yards location, and hired Cushman & Wakefield to market the Financial District property.
“What we try to do is not necessarily to look at what’s readily available to the eye, but to dig and try to figure out where opportunities may be,” Waterman said on Wednesday, recalling his hunt for the new home for HHC employees.
Then in January 2018, GFP Real Estate, in partnership with Northwind Group, signed a contract to buy 50 Water Street.
Because GFP’s contract wouldn’t be completed until October 2019, Waterman’s negotiations involved four parties: The building’s original owners, Milstein Properties; Weiler Arnow Management Company and the Swig Company; the leaseholder Guardian Life and future owners, GFP Real Estate and Northwind Group; and HHC.
Newmark’s Romel Cañete and Daniel Keegan got on board to provide financial strategies.
At the end, HHC signed a 25-year lease for 526,552 square feet, which took effect in October 2019 when GFP closed on the purchase.
The REBNY award to the Newmark team said it “not only achieved the largest relocation in Lower Manhattan in the last five years, but also created a campus environment with HHC’s corporate headquarters” while reducing the cost.
The new office at 50 Water Street will “help the public hospital system further build a more efficient, centralized, and stronger hospital operation,” said Dr. Mitchell Katz, HHC president and CEO, in a statement. “This will benefit our patients and the residents of New York City as we continue to face the threats from this global health crisis and beyond.”
Katz has said the new office would save HHC $200 million in rent over the lifetime of the lease.
This was the third time Waterman took REBNY’s top honor, the second time for Romel Cañete and the first for Korman, Rovitz and Keegan.
The second-place Robert T. Lawrence Memorial Award also went to a Newmark team. Heavyweight Jimmy Kuhn and his team brokered the $1.5 billion sale of a four-property Parker Real Estate portfolio — including the 291-unit Truffles Tribeca at 34 Desbrosses Street — by simultaneously negotiating with four separate buyers.
James Nelson, Jon Epstein, Susan Kahaner and Jennifer Ogden of Avison Young took the third-place Edward S. Gordon Memorial Award for the sales of three properties at 1393 York Avenue, 351 East 74th Street, and 1745 First Avenue.
Usually celebrated with a soiree, this year’s 76th annual industry awards were presented virtually.
Contact Akiko Matsuda at [email protected].