Yahoo moved some of its sales and marketing departments into three tower floors at 1540 Broadway this summer. Was that space the kind of “great vacancy” you’re referring to?
Yeah. With a lot of [landlords], if they have vacancy they don’t want to spend the extra money to gut the space. “Maybe some portion of it can be used or maybe this maybe that …” But the fact is that going into brand-new space makes a difference in attracting tenants—especially if you have a tower floor or you have a column-free building or a brand-new fit-out. If I’m a leasing agent I’d love to have my hands on that stuff because you have a lot of opportunity there to create value for the tenant. So that’s good vacancy.
Beside build-outs, are there any other renovation strategies planned at 1540 Broadway?
We’re doing two things to the building, both of which we negotiated with CBREI in the first transaction. We had negotiated that there would be significant improvements to the curtain wall, and that is going to be underway now. It’s a fairly significant curtain wall repair. And we’re putting in a building management system as we speak. It’s a building engineering system. It allows you to manage the energy flow through the building. It’s an HVAC computerized system, allowing you to basically manage the airflow better.
Edge is based in Washington, D.C., where you have a portfolio of commercial assets. In New York, 1540 Broadway is your only building. Are you considering other acquisitions?
Yeah, there will be more. We’ve been looking, but 1540 was a large transaction, both in terms of the size of the loan and the time spent closing the second phase. It took time, and it took more time than we would have liked. It was a lot of documents. I think now that all of that’s behind us we’ll have more time to focus on the deals we’ve had to pass on.
Are you looking at specific asset classes in Manhattan or in particular neighborhoods?
No, not really. We’re looking at the asset that fits our kind of mid- to long-term profile. We’re not short-term players so we really look at assets where, if it’s a shorter-term play, it’s because it’s probably something unique that allows us to achieve our strategy. But in general our strategy is to mature the investment over a seven- or 10-year period, and to go through another refinancing cycle with the asset in order to maintain the leasing.
Even though CBREI has divested its remaining ownership stake in the asset, Edge and HSBC Alternative Investments continues to retain CB Richard Ellis as property manager and leasing agent. Are there any plans to change that equation in the weeks ahead?
We’re continuing the relationship with the property management group at CBRE and we’re continuing our relationship with the leasing team on the property, which is run by [CBRE tristate chief executive] Mary Ann Tighe. Outside of seeing huge success from them, we also like working with them as people. And I think they really understand this asset and they’re enthusiastic about it—and that helps us be enthusiastic about it, too.
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