Membership has its privileges, as the saying goes, and tenants in the famed Seagram Building have more than most.
With its modernist grandeur, huge Picasso in the lobby and white-glove service, the building at 375 Park Avenue — home to the world-famous Four Seasons Restaurant — has an exclusive, clubby atmosphere.
“This building is the biggest status symbol,” says Richard Farley, director of leasing at RFR Realty, which owns the building and the Lever House across the street. “You could send a letter to ‘Seagram Building’ and it will find its way here,” he says.
The Seagram Building is part of a group known to insiders as the “country club” office towers, an elite group of Plaza District buildings in Midtown that includes the Lever House, 667 Madison, the GM Building, 9 West 57th Street and 712 Fifth Avenue, among others. And in a hot office market where everybody is looking to move on up, these top-tier digs are the hottest of all.
Last year, Manhattan’s Class A vacancy rate tumbled to 6.0 percent from 7.4 percent the previous year. The average asking rent for Class A space spiked 34.9 percent to $68.29 a square foot, according to Colliers ABR.
But both those spikes are pointiest at the top.
“There’s simply no inventory for boutique properties,” Alex Chudnoff, executive director at Cushman & Wakefield, says. “Every time a lease is signed, rent is escalated 10 or 15 or 20 percent.”
At the end of 2005, space at the Seagram Building was going for $112 a square foot, with a 4 percent vacancy rate. It was just one of a handful of Manhattan commercial properties to reach rates above $100. Today the vacancy rate at the Seagram is a mere 2 percent, and building rents now start at about $165 a square foot, says Steve Morrows, senior vice president of leasing for RFR.
“We’ve been in a period of upward pressure on rents,” he explains in an understated manner.
Morrows says he expects those pressures to increase now that real estate tycoon Harry Macklowe controls an additional 6.5 million square feet of office space in the area. Macklowe in February acquired a $7.25 billion portfolio of former Equity Office Properties assets. He paid nearly $1,000 a square foot to the Blackstone Group for the eight Midtown office buildings. Blackstone sold the buildings to pay off the huge debt it incurred in its record acquisition of Equity Office Properties.
“People like Macklowe now have control of a large amount of Class A office space, and they are looking to get in the $150 range,” Morrows says.
But those numbers actually don’t tell the whole story. In the Seagram Building, some tenants shell out an additional $300 to $500 a foot in installation costs when they move in, spiffing up their space with back-up generators, supplemental AC, high-end Italian marble flooring and other features, says Farley.
So what do you get for your money?
For one thing, the floor plates of the boutique building are smaller than those in others, usually ranging from 12,000 to no more than 20,000 square feet. At the Seagram, the architecture is its biggest draw.
“The Seagram Building is world famous, so it attracts CEOs and decision makers from around the world,” Chudnoff says. “It’s an architectural wunderkind and it was the first of its kind.”
Indeed, Dan Cruickshank, the British architectural historian and driving force behind the book/documentary film franchise “Around the World in 80 Treasures,” places the building right up there with the Mayan City of Palenque, the Cambodian ruins Angkor Wat and the cliff dwellings of Mesa Verde.
He anoints the Seagram Building “America’s finest skyscraper,” America’s “sleekest example of modernism,” and points to its far-reaching impact on American architecture.
Designed in 1958 by architect Ludwig Mies van der Rohe with Philip Johnson, and built at 38 stories, the Seagram was the first office building to have floor-to-ceiling glass windows. The entire building façde is made of glass and bronze. The exterior is oiled twice a year, to prevent it from oxidizing. The front features a wide plaza with two symmetrical pools and a huge, multicolored metallic mobile designed by the artist Alexander Calder. Inside, the elevator is made of bronze and copper and shoots up so fast your ears pop.
The city landmarked the entire building in 1989, and the designation applies inside as well as out. Lighting fixtures must be 15 feet from the glass facade. The blinds open at a 45-degree angle, and have only three positions: all the way up, down or midway. Most offices have leather seats, which were also designed by van der Rohe. However, the aesthetic in many of the offices themselves trends toward utilitarian, post-dot-com-era luxury.
You won’t find dual fireplaces or Jacuzzis in the center of these offices.
“That’s old world,” scoffs Morrows. “We have extremely high-end installations in this building.”
The conference room in one office is equipped with glass walls that becomes completely opaque at the touch of a button.
Another office, viewed by a reporter from The Real Deal on the condition its occupants remain anonymous, had marble floors, beveled cherry wood doors and six paintings by Joan Miro hanging from the walls. The corner office featured shag carpeting, a huge antique oak desk, leather back chairs, blond wood tables, laced curtains, an oversized bonsai tree, a flat-screen television and a green marble bar.
“People have a conception [that] certain offices are like something out of a fantasy magazine,” Neil Goldmacher, principal at Newmark Knight Frank, says. “The main luxury is a handsome space that is pleasant to work in, because, frankly, in order to be successful in finance, you’ve got to work a lot of hours.”
The most common amenities are cooking kitchens — sometimes catered by chefs — executive bathrooms, and showers and fitness centers, he says.
Still, there’s another kind of amenity in the Seagram Building and other country club properties that’s impossible to replicate outside the Plaza corridor.
“What this building does is legitimize anyone who has an office here,” Farley says. “So if you’re opening a hedge fund, you’re immediately a player.”
And that doesn’t just apply to hedge funds. When Charlotte, N.C.-based Wachovia Bank decided to consolidate its New York investment banking operations, it didn’t just recruit big names from JP Morgan and Morgan Stanley to beef up operations. It also constructed a three-story trading floor within the Seagram Building because of its cachet.
The trading floor features a massive one-wall light installation of various screens called the “Waquarium,” which has undulating waves that change color periodically.
“We’ve made a huge commitment,” Steve Cummings, head of the bank’s investment unit, told the Charlotte Observer at the time. “We wanted to be in a world-class, high-visibility building.”
Neighbors are part of the attraction
Alex Chudnoff, executive director at Cushman & Wakefield, who leased space in the Seagram Building to Wachovia, says that the “personalized feel” of the building, and the “knowledge of who your neighbors are,” is part of the skyscraper’s draw.
“It’s the feeling of being with your brethren,” he says.
Those brethren include some big names: There’s Steven Rattner and his Quadrangle Group; Michael Schulhof, the former CEO of Sony; Arden Asset Management, headed by Averell Mortimer and Stephen Cordy. There’s also the private equity firm Clayton Dubilier & Rice, buyer and seller of companies such as Heinz, FedEx and Kinko’s.
Centerbridge Capital Partners, started by former Blackstone Group managing partner Mark Gallogly and Jeffrey Aronson, is perhaps the best-known hedge fund in the building. They have been in the headlines recently for their involvement in a possible bid — along with Blackstone — to take over Chrysler.
There’s Lexa Partners LLC, headed by Edgar Bronfman Jr., and the Samuel Bronfman Foundation, named after the founder of Seagram, the company that lends its name to the building. Lesser-known, but no less active, tenants include Aslan Advisors, Diversified Arbitrage Strategies, Abadi & Company, Whitcom Partners and VegaPlus Capital.
Larger tenants include NASCAR, ConocoPhillips, Banco De Bogot , Union Pacific and the law firm Sullivan & Cromwell. Fiat USA has an office, as do founders the Agnelli family; Broadway Partners, the real estate firm, and the cofounders of Gulf and Western are moving in.
“A certain number of tenants and certain types of tenants are in a building and once there’s enough of a center of gravity with tenants, it tends to attract more of them,” says Neil Goldmacher, a principal at Newmark Knight Frank, who has leased out several spaces to clients in the Seagram Building. “They know each other. And the Four Seasons is a Midtown Wall Street cafeteria.”
While the GM Building has perhaps the largest number of hedge funds and 9 West 57th Street and 667 Madison have more private equity firms, the Seagram Building has “no shortage of people in fund management, alternative investments, private equity and boutique advisory firms,” Goldmacher says.
Steve Morrows, senior vice president of leasing for RFR Realty, which owns the Seagram Building, says one of the main reasons tenants take space in the tower is for its networking opportunities.
“It’s a clubhouse; all high financers do business with each other in the building,” he says. “They go for lunch at the Four Seasons, breakfast in Brasserie.”