The Real Deal New York

712 Fifth: On top of the world

October 24, 2007 04:09PM

The view from the top is always nice. But few views beat those from the towers of 712 Fifth Avenue.

The vista spans the glittering gold of the Crown Building at 730 Fifth Avenue, the aging elegance of the Plaza Hotel and the thick, wooded canopy of Central Park. To the right loom other landmarks of the Plaza District — the GM Building and the Trump Building.

“Everything is right here — you can practically reach out and touch it,” says Arthur Bocchi, vice president of leasing for the Paramount Group Inc.

New York City’s top-tier “country club” office towers, as they are called by insiders, have different styles. Some are staid, stiff and old-moneyed, like the Seagram Building; others are small and clubby, like Lever House. Built in 1990, 712 Fifth Avenue is the newest addition to the elite club of the Plaza District’s prime real estate.

These are salad days for premier office towers like 712 Fifth Avenue. The boutique building, home to the offices of Christian Dior, Roberto Cavalli, Canali and a number of other fashion companies, has about a 2 percent vacancy rate, and rents continue to escalate, Bocchi says. Asking rates ranged from $50 to $65 a square foot in 1991 when it opened. Some are now approaching $165 a square foot.

Looking ahead, however, the fashion houses may be edged out by rising rents, which are being pushed up by the hedge funds arriving in the building in greater numbers. The Italian fashion company IT USA used to have its headquarters in 712 Fifth but moved downtown as rents escalated, fueled by hedge funds that could pay the higher prices.

Current tenants include Elliott Associates, a hedge fund founded by billionaire Paul Singer; Mannheim LLC, a private international investment company; Stockbridge Capital, a real estate investment firm; and NCH Capital Advisors, an investment firm founded by George Rohr specializing in Eastern European and Russian markets. Other occupants include developer Buttonwood Real Estate and Vector Group, which owns Liggett Tobacco, and a real estate subsidiary called New Valley, which owns a 50 percent interest in Prudential Douglas Elliman, the largest residential brokerage in the New York metropolitan area. CVC Capital Partners, a private equity firm, just signed a lease, drawn by the prime location.

Clearly, 712 Fifth is in no danger of going vacant. And top-tier tenants are willing to pay more than ever, as rent hikes in the building’s prime spaces are outpacing increases seen in the rest of the building. Demand for the tower’s highest-end floors increased about 30 percent in just the last three years, says Bocchi.

“You always had a differential, but it’s now almost twice as much to rent in a tower as it is towards the base,” says Peter Braus, an executive vice president at Sierra Realty who has leased space in the building. “That is something you definitely didn’t see 10 years ago.”

The 53-story, 545,000-square-foot building — which has a pearl-gray marble exterior, gray limestone and black granite — offers the glamour, glitz and cachet one would expect of a (relative) newcomer. The building towers above tony stores like Bergdorf Goodman and Louis Vuitton on Fifth Avenue at 56th, what fashionable shoppers call “the golden triangle.” With the right credit cards, one could easily blow a small fortune on the way to work there.

Of course, anyone able to pay the rent at 712 Fifth Avenue probably has plenty of cash to spare. And the chic feel of the neighborhood is part of the building’s cachet. Henri Bendel, the upscale women’s specialty store, anchors a large portion of the ground floor.

The fashionable aesthetic is enhanced by the presence of its glamorous tenants.

“This is a very important fashion district for us,” says Alessandro Mattarini, president of Roberto Cavalli’s U.S. operations. “A lot of companies are in the area, and all the buyers come by and come to this building. It is like a status in this city because you are in the middle of the most important retail area.”

“We like the location, being right in the heart of the Plaza district,” says Andrew Oliver, managing director and principal of Sonnenblick-Goldman, the real estate investment bank, which just renewed its lease on the 13,000-square-foot 14th floor. “It’s a very high-end building, with top-quality management, and it’s prestigious.”

The smell of expensive perfume occasionally wafts into the marble lobby, as a pianist teases out “New York, New York” on a baby grand and security guards stand stiffly in front of a velvet elevator rope.

“For guys who are now the masters of the universe, it’s got all the bells and whistles,” says Braus. “When someone comes to see them, it’s helpful to have a lobby like that.”

Of course, 712 Fifth’s location wasn’t always a blessing. The project drew the scrutiny of a number of interest groups from the moment it was first announced in 1983. Preservationists complained that the developers planned to destroy two five-story buildings on the site, the former Rizzoli Building and the former Coty perfumery. In 1984, an architectural historian unveiled evidence that the renowned French glass designer Rene Lalique had designed the windows at the base of one of those buildings in the 1860s. The city stepped in and landmarked the building, forcing the developers to head back to the drawing board and come up with a plan to incorporate the two buildings into the base of the tower.

By the time 712 Fifth Avenue was finally done in 1990, it had had two different designs, three different development teams and at least four different plans — apartment building, hotel, apartment-hotel and then office tower.

The small floor plates of the building — many of which are below 14,000 square feet, and some are just 10,000 square feet — are part of the draw.

“This building is boutique by nature,” Bocchi says. “The small floorplates present opportunities for smaller prestigious firms to have their own floors.”

The small floorplates also make it easier for tenants to customize their spaces to suit their personalities.

On the 47th floor, Pierson Capital, a financial firm that specializes in construction, has old-world decor. The lobby has a large Persian rug, vases sit atop antique walnut furniture, and the walls are darkly paneled.

Down on floor 44, the Gale Company, a real estate development company, has gone for a different look altogether. It has light carpeting, leather seats and glass tables with bases fashioned out of metallic machinery.

The emphasis here is on the humongous flat-screen televisions — slowly scrolling through renderings of developments planned across Asia — and on oversized models displayed throughout the office of the Inchon Bridge, a $1.4 billion sea crossing bridge, and Songdo City, a self-contained city the company is building in Korea. It’s an altogether postmodern, architectural feel.

On the 30th story, home to Canali and its blonde wood floors, rooms are filled with racks of high-end clothing and shoes. The walls are lined with pictures of models. The place has an elegant boutique vibe.

On 31, TSG, a San Francisco-based hedge fund, has mahogany walls, marble tables, Persian rugs and leather chairs.

Vector, on 52, has many windows, and though it has polished blonde-wood floors and antiques, it’s hard to notice anything but the fog-enshrouded peaks of nearby buildings in the panoramic views.

“It’s almost like a different building, one floor to the next,” says Bocchi.

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