The sun was glistening off the blue glass of 3 Columbus Circle last Thursday. A clutch of nattily dressed real estate executives standing on the 19th floor terrace had to squint against the strong light, reflecting off the high-tech carapace of the building formerly known as 1775 Broadway. Once the headquarters of Newsweek, and before that General Motors, the building began life in 1928 as a sturdy Art Deco brick box towering over Columbus Circle. One of the biggest buildings in the city at the time, it was a show of emerging industrial might in the heart of Manhattan.
But that was before GM moved to the other end of 59th Street, erecting its glass and marble monolith. That was before the arrival of the Trump International, the Time Warner Center and the Apple store on Fifth Avenue. Glass has become big business across the city, where brick and steel still sometimes rules—the Empire State Building is still our most recognizable landmark. Glass was what Joe Moinian, the Iranian-Jewish developer, former cook and now master of some five million prime square feet, decided to go with, then. It was the boom-boom new millennium: Why tear down a perfectly serviceable building when you could simply sheath it in a slick new suit, ask those $100-per-square-foot rents (the standard for a top-of-the-line tower) and cash the checks?
Well, those days are long gone. All over New York, office towers sit empty, with a vacancy rate around 12 percent, considerably higher than the 7 percent of 2006, when Mr. Moinian laid out his ambitious plan to remake the building. Since then, he has been forced into a partnership with the city’s largest landlord, SL Green, which has recently been feasting on dozens of buildings across the city, buying up hefty stakes and entire properties.
Together, they had to fight off a hostile takeover by Steve Ross, whose Related Companies owns the gleaming Time Warner towers across the street. Mr. Ross had wanted to tear down 3 Columbus to build apartments and a Nordstrom’s. He reportedly called it ugly, among other epithets. Even after SL Green cut a check last November for $258 million—the largest ever cashed by the county clerk’s office, according to The Real Deal—to cover the mortgage note on which Deutsche Bank and Related were trying to foreclose, they still took the pair to court, and settled only this March.
Asking rents at 3 Columbus Circle are almost half what they once were, and a number of brokers questioned whether Moinian and SL Green would be able to realize even that.
Still, there was Mr. Moinian, standing on the terrace, gesturing around Columbus Circle, giving The Observer a tour of his trophy, tarnished as it may be. “We have spent a lot of money and time and effort to get this property to where it deserves to be,” Mr. Moinian said. He raised his hands, as if making an offering, and gestured up and down Eighth Avenue. “It now fits into a class with the Time Warner and Hearst. It sets a new standard.”
“That is a rather extreme statement,” one leasing agent told The Observer days later. “If you put lipstick, or a new glass facade, on a pig …” He trailed off, his point conveyed.
It was in night school that Mr. Moinian first heard about 1775 Broadway. In the fall of 1998, he had been in the business two decades, but was hoping to learn more about the buildings he built, so he studied part-time at N.Y.U. One of his classmates gestured to an older gentleman sitting in a nearby desk. “Do you know who that is?” the classmate whispered to Mr. Moinian, as he recalled the events on our tour. “That’s Lester Weindling. He owns 1775 Broadway.”
Mr. Moinian shrugged it off, until he was in a uptown-bound cab a few weeks later and he passed the property, which still dominated the southern side of the roundabout. “I said, ‘Oh my god, this is the building,” Mr. Moinian recalled. He reached out to Mr. Weindling, who had purchased the building in 1969 with the proceeds from the sale of his family’s apartment holdings in Queens. The then-71-year-old developer said no. Six months later, when the city revived plans to redevelop the Robert Moses-built New York Coliseum convention center, he changed his mind, Mr. Weindling didn’t want to deal with the headaches of a major construction project, according to Mr. Moinian. They sealed the deal with a handshake over lunch at Le Bernadin. The price was $130 million, the deal closed Sept. 15, 1999, almost a year after those classroom whispers.
It was exactly because of those apparent headaches that Mr. Moinian said he was interested in the project. He saw a boom coming to the West Side, and above all else, the opportunity to own Central Park views was too good to pass up. “You can never take these away,” he said, then pointed to Extell’s One57 rising a few blocks away. “You see that? They have to go up 30, 40 stories to get these views, because there are buildings in front of them.”
While that may be true—and even Mr. Moinian’s views are blocked on the lowest floors by the Museum of Art in Design—the vistas at 3 Columbus are through the same three-foot-wide punched windows that have been here for almost a century, as opposed to the sweeping floor-to-ceiling glass that has become the standard at towers like the Time Warner Center. Up close the panoramas are spectacular, but they begin to disappear a few feet back.
Ironically enough, it was Steve Ross who prompted Mr. Moinian’s decision to revamp his property. At a city planning presentation a few months after he purchased the building, Mr. Moinian saw Mr. Ross’s proposal. “That’s when I knew things were about to change,” Mr. Moinian said. “There is no question he has revamped the entire area.” (Asked if there was any bad blood remaining between them, Mr. Moinian said, “Business is business. That’s all behind me.”)
Throughout the tour, Mr. Moinian’s Blackberry rang out, and the Alicia Keys hook from “Empire State of Mind” would echo through the empty office space. Mr. Moinian smiled the same toothy grin he always wears with his expertly groomed suits. He is eternally bullish.
And so it goes at 3 Columbus Circle. The main focus now is on finding tenants, the construction having wrapped up earlier this year. With 600,000 square feet of vacant space—all but the top three floors are occupied—Mr. Moinian said there was a rare opportunity available. Even with all the other available offices in the city, few are as big. He was effusive about the Class-A amenities of his revamped building, which are unquestionably updated. The mechanical systems have been modernized, the lobby has doubled in size and moved to Broadway, that new curtain wall, while not providing bigger views, does improve the efficiency of the building. Mr. Moinian said he expects the project to receive LEED certification. We asked if it might be Gold or Silver, one of the higher levels of sustainability recognition. He responded that was impossible for a retrofit like his. And yet the Empire State Building got its gold just last week.
At the same time, the newest technology can do about the low ceiling heights, the tight quarters and the building’s irregular trapezoidal layout. “Looking back on it, it seemed like a logical thing to do, but now it is a very hard sell,” one real estate executive said. “Then again, a lot of people made mistakes a few years ago.” The going wisdom today is that it would have been better to tear down the building rather then recast it anew. “It is probably the most talked about building in the city, and not in a good way,” another broker said. Everyone wants to know what might happen, who will take the space—if anyone—and what SL Green might see in the building. Are they just waiting to tear it down?
Even Mr. Moinian’s partners are circumspect about the project. SL Green had to take it off the market for five months, redo whole floors add some bathrooms to help agents and tenants appreciate the potential of the space.
“It’s Class-A quality, but it’s not a marquee building,” said Steve Durels, an executive vice president and director of leasing at SL Green. Still, he said there are no plans to do anything but lease up the building. “We would not have made the huge investment we did in this building if we did not believe in it,” he explained. In fact,
Mr. Durels said this was the firm’s specialty, repositioning buildings to maximize profits. Every building cannot be a marquee property, nor can every firm afford such properties. While 3 Columbus may no longer command the top dollar its developer had hoped for, the $60 to $80 a square foot is good for Midtown, especially in these times—the local average has hovered around $55 for the year.
Of late, it appears 3 Columbus may finally have turned the corner. In the past two months, Mr. Durels has entered into negotiations for at least 400,000 square feet, or about two-thirds of the building’s empty space. “Because of the building’s previous struggles, we had to take some time off, but we really stepped up the marketing, and I think it’s paid off,” Mr. Durels said. “In this case, we felt we really had to over-developer, but it was worth it.”
There is also the fact that with SL Green in control, “we’re well capitalized,” as Mr. Moinian kept putting it, almost as a mantra. On top of its $258 million stake, SL Green has invested another $100 million in equity matching what Mr. Moinian had already put into the building. It is hard to top two of the city’s top landlords. “People immediately respect the changes, it’s like night and day,” Mr. Durels said.
And in many ways, this is simply the reality of building in New York today. Dozens of retrofits and reclads are taking place in the city, from 330 Madison to 1095 Avenue of the Americas, none with the scrutiny faced by 3 Columbus. Perhaps this is because of the challenges Mr. Moinian faced, his bad timing, or simply that he has the best location of them all, and so everyone was watching. The fact remains, there are only so many buildings that can reasonably be torn down and rebuilt without wreaking havoc on the city’s busy streets.
As for Mr. Moinian, in a email on Tuesday he said he would do it all again if he had the choice. “We are very happy with the end result of our redevelopment of 3 Columbus Circle—and we wouldn’t do anything differently,” Mr. Moinian said. “We are proud of our investment in this building and for perfectly executing our vision for its redevelopment. If the market isn’t $100 per square foot, we are fine.”