Giant News Cave Bought By Broadway for $700 Million

021207 article breaks Giant News Cave Bought By Broadway for $700 MillionNow Mort Zuckerman will have to write his monthly rent checks to a rival.

The home of Mr. Zuckerman’s prized asset, the Daily News, is in contract for more than $700 million, according to a source with knowledge of the deal.

A young and bullish landlord, Broadway Partners, will buy the 14-story media mecca at 450 West 33rd Street for more than $410 per square foot from a group of owners, led by Joseph Chetrit.

Aside from the $1.8 billion sale at 666 Fifth Avenue that closed in January, this sale will be the largest of 2007 thus far.

The 1.7-million-square-foot building, which is awash in the smell of newsroom body odor and deadline desperation, counts the News, the Associated Press, Channel 13, and U.S. News & World Report among its headliner tenants.

For Broadway Partners, the deal is another huge splash into real estate. Last year, Broadway Partners took control of a portion of Beacon Capital Partners’ national portfolio for more than $3.3 billion, which includes the 60-story John Hancock building in Boston. (The 38-year-old building at 450 West 33rd Street, incidentally, used to be called the John Hancock building.)

But this deal presents a sort of awkward arrangement for Mr. Zuckerman. When Broadway purchased the Beacon portfolio last year and its mass of properties, it made itself a direct rival of Mr. Zuckerman’s real-estate empire, Boston Properties.

Mr. Zuckerman will now pay his newfound adversary every month.

The Daily News and U.S. News & World Report (another Zuckerman asset) have at least 200,000 square feet in 450 West 33rd Street, according to a leasing broker at the building. If Mr. Zuckerman has no issue with dealing with Broadway Partners thus far, he might when he sees the new rent figures.

For one thing, the News lease was signed in the mid-1990’s, which means Mr. Zuckerman locked in rent numbers at a below-market rate. And when the News lease ends, the Far West Side should be populated with new glass office towers and condos, which should hike rents up even more. The average asking rent in the building now, according to a market report, is $40 a foot.

Broadway Partners knows exactly what it has gotten itself into. The building has 800,000 square feet of air rights available, the New York Post reported.

The source familiar with the deal said that it had not been decided whether Mr. Chetrit or Broadway Partners would take the air rights.

Representatives for Broadway Partners and Mr. Chetrit declined to comment.

THE NEW YORK LIFE BUILDING ISN’T having any trouble finding tenants. And, unlike so many of its iconic peers, it’s not turning residential, either.

Totally the opposite: The building is now fully leased, after filling 300,000 available square feet in the last 18 months.

The leasing agent, Cushman & Wakefield, finished tying the big golden bow around the New York Life Building at 51 Madison Avenue this week.

“We worked hard on this, and it’s been successful,” said an understated Paul Glickman, a leasing broker at Cushman who led the campaign.

The insurance company told Mr. Glickman 18 months ago that it was redeploying lots of its employees to Westchester, and that floors 17 through 32 at the Cass Gilbert–designed, 40-story landmark would become available.

The rest was in the hands of the brokers. The commercial brokerage set out its task, complete with morale-inducing military metaphors: It would go on a “campaign” to lease the building, and organize its efforts into “phase one” and “phase two.”

Bring on the surge! Mr. Glickman, along with his team—Mitti Liebersohn, David Glassman, Diana Biasotti and Shawna Menifee—arranged all the transactions.

Mr. Glickman said he was most proud of how diverse the tenants are.

A sampling: Educational publisher Addison Wesley Longman leased the 27th through 29th floors, with nearly 40,000 square feet; a private equity firm, Accretive Technology Partners, took the 31st floor; and a law firm, Quinn, Emanuel, Urguhart, Oliver & Hedges, took the 32nd.

What’s most exceptional is that the New York Life Building is not foundering. So many city landmarks, which were constructed without big floor plates or bloated rent checks in mind, are struggling to find an identity.

The Empire State Building is on the verge of purging half its tenants so it can make much-needed upgrades; the Toy Building is nearly empty and might stay office or go condo; part of the Woolworth Building has gone condo; the clock tower at 1 Madison is now residential; and the Rodin Studios at 200 West 57th is on the verge of a major makeover.

Exhausting, right? That leaves the golden-pyramid-topped New York Life Building well ahead of the pack.

And what does it have over its peers?

Well, for starters, a 1,000-seat cafeteria—the quality that Mr. Glickman and Ms. Biasotti first mentioned.

But then there’s also good management.

“The fact that it’s a headquarters-caliber building—these tenants got the benefit of being located in a place created to service New York Life,” Mr. Glickman said.

REAL-ESTATE BROKERS DON’T HAVE a lot of time, so who cares if they buy their rumpled suits off a rack at the Men’s Warehouse?

Well, it is Fashion Week, so the Plaza-district brokerage PBS Realty Advisors is trying to change the look! On Wednesday, Feb. 7, PBS will dish out $100 gift certificates from Bergdorf Goodman to the first 75 brokers who arrive to take a look at 150 East 52nd Street.

It won’t quite buy a full suit, but a nice scarf could offset those somber suits!

“Bergdorf is one of the better department stores in the city, and we thought this was a nice way of offering the community a gift,” said John Brod, a principal at PBS.

The 300,000-square-foot jagged glass building has its niceties: By October, 90,000 square feet will be available, where each floor promises 10 corner offices, said Mr. Brod.

Even nicer is the breakfast the brokers will be fed after they get their ticket to high-end fashion. According to an e-mail invitation, the brokers will be fed “Fresh Fruits & Berries drizzled with Mint Syrup, Yogurt Parfaits with Granola, Mixed Berries and Diced Mango.” Talk about classy!