Charlie Murphy.

The Commercial Observer: National construction spending increased by 1.5 percent in December, the most since August. Has that uptick been felt inside Turner Construction?
Mr. Murphy: It has. For instance, one of the trends going on right now is residential again. There’s a market out there, more on the rental side, I think. We’re working with a developer for a site in Greenwich Village, and this developer was able to, without a lot of trouble, get his financing together. For a large project. This is a half-billion dollar project. So I think the money’s out there; they just want to invest in the right projects with the right developers.

Is the money available to all, or only New York City’s most recognizable developers?
It’s probably like anything else: How much do you want to pay for your money? But what else is interesting is, in the Greenwich Village case, it was a consortium of lenders. It wasn’t just one bank participating. You could see that the banks are splitting up their risk. There were a number of banks involved in this particular project, and, of course, they’re making the developers put more of their own money into the project.

Turner has expanded its work with its institutional and government clients over the past several years. What’s the strategy behind that move, and when the economy recovers will Turner recalibrate its focus on commercial clients?
Here in New York we’ve always worked for the [School Construction Authority]—and when I say “always” I mean the past 15 or 20 years—as well as the Economic Development Corporation and the Port Authority. So through good times and bad times, we’ve always made a conscious effort to meet that part of our portfolio so when you have a downturn, and there’s less private money available for things, we’ve established a reputation with those public clients that we continue to work for. They become a repeat customer for us.

Since 2008, has that particular sector been more active?
It had until the past year or two. They seem to have cut back work. With less revenues coming into the municipal government, they had less for capital, so we’ve witnessed that.

Are the commercial clients coming back?
There still isn’t a lot. We’re doing just a few commercial office buildings. We’re doing Boston Properties’ 250 West 55th Street, which is exciting because it was a stalled project that’s now come back to life after they secured an anchor tenant. We’re also building Canon’s Americas headquarters out on Long Island. That was another project that got postponed a year due to the 2008 financial collapse.

So, if the institutional clients are less active, and new construction is still not what it used to be, where’s the work coming from?
We’re seeing more work on the interiors side of that commercial market. We’ve done work for JPMorgan Chase, American Express, Brookfield Properties, Time Warner, and we just landed a very large project for Nomura Bank at World Financial Center. They retained us to do their tenant fit out, and that came at the very end of last year.

Health care and education are growth sectors. Has that translated to new construction?
I’m in my 34th year with Turner. We’ve been doing health care projects since as long as I’ve been here, so it’s really one of our core competencies. But we’re seeing even more now, and very large. NYU Langone Medical Center, which we’re doing the preconstruction for, actually has two large projects on its campus: it’s the Energy Building and Kimmel Hospital. Though there’s a lot of preparation work—buildings are getting demolished on the site and you have to move people out in their move to other buildings in the area—we should start in earnest in the spring of 2013 with the Kimmel Center.
New York Presbyterian is looking at a large program. We’re working up at Sloan-Kettering. And North Shore Hospital has a really robust facility upgrade happening.

Turner Construction is building 2 World Trade Center, but Tishman Construction won bids for the other buildings on the site. Did you guys make a play for those jobs?
Historically, Tishman was Silverstein’s builder, and we got an opportunity … There was just so much going on there, and we had built the Norman Foster-designed Hearst headquarters, and to Silverstein’s credit, he said, ‘Who makes sense to go do another Norman Foster building: Turner Construction.’

Put yourself in the owner’s shoes: Does it become more complicated juggling construction companies for what, in many ways, is one project?
I don’t think it adds to the complexity. I think what it lets him do as an owner is he can draw on a larger talent pool of builders. As much as you like to think that all 800 of our employees are A pluses, there are some who are better than others. So to be able to draw on a larger pool I think is advantageous to a client like Silverstein, especially when you have that much work going on at one site.

Do you work well with your counterparts at Tishman, which I imagine is among Turner’s biggest competitors?
We have a great deal of respect for Tishman. In fact, we’re joint venture partners because we’re doing the transportation center together. So there’s a collaboration really from the top down that we like. We have a common client in Silverstein, and from my vantage point and theirs, we want to do the best for the customer. So even though we’re on the same campus we’re going to work together for the best results for the client.

jsederstrom@observer.com

It was a busy year for Mr. Baxter and his colleagues at Jones Lang LaSalle. His four-man team comprised some of the city’s most prominent brokers of large-scale commercial office buildings, and as the Manhattan sales market’s post-recessionary thaw continues, Mr. Baxter estimated that the group had tallied an impressive $1.3 billion in deals this year.

Three days before Christmas, however, it wasn’t one particular skyscraper Mr. Baxter was bargaining over from his plum seat at Casa Lever. In a year-end rush, his group had loose ends to tie up, deals to close and transactions still in the works. And so, on this particular Thursday amid a bustling lunch crowd, Mr. Baxter was not negotiating with a buyer or a building owner, but rather one of his own assistants, whom he was asking to stay late to receive critical documents and to help get the team through the rest of the day.

Richard Baxter. (Illustration by Joao Maio Pinto

“She was going to take the train to Boston,” said Mr. Baxter, after hanging up with his assistant. “But we just booked her a flight for later this evening.”

Such are the costs of deal making in the city, much like lunching in prime and pricey spots like Casa Lever. On the way in, Mr. Baxter, along with JLL colleagues Ron Cohen and Glenn Tolchin, stopped to chat with Jon Mechanic and Sush Torgalkar, who were having lunch at a nearby table. The conversation that ensued had all the easy chatter and laughs of old acquaintances catching up, yet it wasn’t difficult to imagine how casual encounters like this can spawn business. Mr. Mechanic is the city’s top transactional real estate attorney and Mr. Torgalkar is the chief operating officer of Westbrook Partners, an active buyer and seller with holdings that include boutique asset 444 Madison Avenue.

A natural networker with a sharp wit, Mr. Baxter seems readily able to take advantage of such opportunities. Having a grasp of the industry’s personalities is helpful in brokerage, allowing a level of insight beyond the facts and figures of a transaction. To hear him tell it, simmering disputes, hidden ambitions and other underlying factors can play as much of a role in sealing a deal as an investment’s rate of return or a building’s vacancy.

Settling into what he claimed was the real estate investor Aby Rosen’s usual booth, Mr. Baxter shifted conversation to the Seagram Building, the trophy tower that sits across Park Avenue from Lever House and, like Lever, is also owned by Mr. Rosen.

Years ago, Mr. Baxter was one of the brokers who sold a stake in the property to the billionaire investor Peter Brant. Earlier this year, Mr. Brant traded that interest at a huge profit to the Blackstone Group.

Rumors in the industry circulated that the sale had as much to do with Mr. Brant’s soured relationship with Mr. Rosen as it did cashing in the stake’s big returns. According to published reports, in fact, Mr. Rosen had allegedly made insulting comments about Mr. Brant’s wife, the former supermodel Stephanie Seymour.

“A woman’s scorn,” Mr. Baxter said, acknowledging with both amusement and marvel the dramatic sequence of events that may have led to the investment’s turnover.

In a more recent deal that Mr. Baxter wasn’t involved in but that also highlighted the hidden psychology underpinning the business, SL Green, among the city’s largest commercial landlords, was rumored to have snapped up the office building 10 East 53rd Street. SL Green has been one of the city’s most active acquirers of office buildings, specially through the downturn in the market when prices sagged from record highs. But the JLL team’s assessment of the deal was more penetrating than attributing it simply to SL Green’s voracious appetite.

SL Green had likely been disappointed at not getting 510 Madison Avenue, a nearby building that the firm nearly foreclosed on last year by buying up the property’s debt. The deal had slipped away from the firm when the rival REIT Boston Properties recapitalized the property, taking control. SL Green was paid handsomely, but 10 East 53rd Street was its way of restoring a bruised ego, picking up a boutique building that can potentially compete for the same kinds of tenants that 510 Madison Avenue attracts.

What is such insight worth in a deal? Perhaps not much. But if a broker’s job is to decide who is going to have the extra oomph to fully realize a property’s potential value, perhaps a lot.

“It is a matter of marketing and finding the buyer with the right vision for the asset,” Mr. Baxter said. “Directing the buyer towards maximizing the property’s true potential enables us to obtain premium pricing for our sellers. The five to ten percent premium wins the property. That is what our team does.”

Mr. Baxter and his team’s grasp of the industry’s players has paid off in the deals they have arranged in recent months. This year, the group sold both 737 Park Avenue and 150 East 72nd Street, for $360 million and $70 million respectively, to Harry Macklowe. Mr. Macklowe, once the prince of Manhattan’s real estate industry, took a precipitous and publicized fall during the recession. Though few doubted that Mr. Macklowe was still well-heeled enough to compete for major assets in the city, the acquisitions marked a surprising comeback and earned Mr. Baxter and his team accolades for identifying Mr. Macklowe as a buyer with resilience when many others had counted him out.

Mr. Baxter began his career during the early 1980s in sales brokerage at Newmark, where he and Mr. Cohen first became brokerage partners. The pair shifted to the Edward S. Gordon Company by the 1990s, at the time one of the city’s major real estate firms. ESG, as the firm’s name was abbreviated, eventually was acquired, first by Insignia, and later by the world’s biggest real estate services firm, CBRE.

CBRE, however, already had a powerful brokerage duo in place: Darcy Stacom and William Shanahan, who had a contractual right at the company to broker its deals in the city, said Mr. Baxter and Mr. Cohen. With a bustling business of their own, the pair proposed merging into a four-member group to defuse a potential rivalry and allow everyone to operate within Manhattan.

“It got complicated,” Mr. Baxter said about the talks then to join the teams, preferring not to go into the details of what those complications entailed.

Soon after, the pair ended up departing for Cushman & Wakefield, where they met Scott Latham and Jon Caplan, two sales executives at the firm. The two groups quickly merged and have been negotiating deals together ever since, although they have their specialties.

Mr. Cohen, for instance, has focused on recruiting foreign buyers and sellers into the team’s pipeline of contacts and deals, especially from Israel, where he is from and where investors have been active in the New York commercial real estate market in recent years. The four-man team’s time at C&W proved successful: In 2007, the group brokered the $1.8 billion sale of 666 Fifth Avenue, then the biggest commercial office sale in Manhattan, to the real estate investor, and Commercial Observer owner, Jared Kushner.

Last year, however, Mr. Baxter and his colleagues took a gamble, leaving Cushman for the rival brokerage firm Jones Lang LaSalle. The move, one of the biggest shakeups in the city’s investment sales industry in years, was a clear victory for JLL, whose lack of a competitive sales team was becoming increasingly conspicuous in the eyes of many real estate observers, not least of all those at the dominant brokerage firm CBRE.

For a time, the team seemed to lose ground to competitors like Ms. Stacom and Mr. Shanahan, who in 2010 appeared to re-energize the investment sales market by scoring a string of prominent sales, not least among them 340 Madison Avenue, 125 Park Avenue and 600 Lexington Avenue.

But Baxter and the team have regained ground. Aside from prominent deals like the pair of residential buildings the group sold to Mr. Macklowe, the team has sold smaller but still-lucrative assets, like 15 Little West 12th Street, which the group traded to investor Steve Elghanayan for $70 million in May. In June, they sold 70 Pine Street to Metro Loft for $205 million.

Heading into 2012, meanwhile, the group has even bigger deals in the pipeline. Indeed, the team will be hitting the market in the upcoming quarter with two prominent assets—one of them in Midtown, the other in Midtown South—that Mr. Baxter expects will trade for $600 million and $300 million respectively. “New York is a huge market and the way we look at it, there’s room enough for everyone,” Mr. Baxter said.

Mr. Baxter, Mr. Cohen and Mr. Tolchin were clearly in a hurry to leave Casa Lever. With so much to do, they had ordered a car to meet out front and shuttle them back to the office. By then, Mr. Mechanic and

Mr. Torgalkar had left, but in their place was Andrew Mathias, president of SL Green and the man in charge of overseeing acquisitions at the firm. Mr. Baxter and his team exchanged hellos and slid in to catch up.

The sense of urgency to leave was suddenly gone. The office could wait.

dgeiger@observer.com

I won't blink. I can't! (Getty)

The city has been eagerly awaiting the construction of Boston Properties' new office tower at 55th Street and Eighth Avenue, an on-again-off-again project by SOM that will likely be the first new office tower of the real estate rebound. (The World Trade Center does not count, but what about Extell's Diamond Tower?) Having secured a big MoFo as a tenant in March, Mort Zuckerman is ready to build, and The Post's Steve Cuozzo reports building permits were just approved for 250 West 55th Street, "paving the way for full-bore work."  But the more exciting news at the corner could be Joe Moinian's gambit across the street.

The mysterious Harry Gross is already hard at work on the city's tallest hotel there, but Mr. Moinian also got an expected approval for a hotel of his own next door, a 34-story number at 237 West 54th Street. The 100th Most Powerful Man in Real Estate seems to think this is all part of a move to force Mr. Gross to buy out Mr. Moinian.

No rendering of the Gene Kaufman-designed hotel was available. That's led to speculation that, rather than build, Moinian would prefer to be bought out by Harry Gross, who's putting up the block's third giant project -- a 60-story Marriott hotel next door at 1717 Broadway.

Moinian's project would likely block views from the Marriott's lower floors. Moinian's rep blamed the lack of an image on a confidentiality agreement with an unidentified partner.

This is not the first time the wily developer has made a hair-raising move in the neighborhood. Who could forget the fight with Steve Ross over Columbus Circle, which Mr. Moinian eventually won. Can he turn the same trick here?

mchaban@observer.com :: Follow on Twitter @tacitelli

That appears to have changed. Landlords now can command higher rents with fewer tenant incentives, evincing a serious pivot in New York's economy.

A new report from Jones Lang LaSalle shows the highest recorded terms on leases and subleases at six trophy buildings in midtown from 2007 through the beginning of 2011: 590 Madison Avenue, 640 Fifth Avenue, 888 Seventh Avenue, 712 Fifth Avenue, the GM Building at 767 Fifth Avenue and the Carnegie Hill Tower at 152 West 57th Street. The net effective rents—the base rent minus the cost of tenant incentives—have rebounded in the favor of landlords.

They're not at 2007 or 2008 levels, the loudest years of the real estate boom. But they are not at 2009 and 2010 levels, either.

At Boston Properties' GM Building, for instance, the highest net effective rent on a new lease was $113.80 a square foot in 2007, and dropped to $105 in 2010. It has climbed to $175 this year.

The biggest turnaround has been at Vornado's 888 Seventh. The highest net effective rent tumbled from $132.13 in 2007 to $30.51 in 2010; and has jumped to $114.48 now. (The $30.51, it should be noted, was for a discounted sublease.)

This is not to say that tenant concessions are dead as a trend at the high-end. As the Jones Lang LaSalle report notes, while asking rents in midtown trophies were up 16 percent annually in May, the per-square-foot average for tenant incentives for each year of a lease was $5.34 in 2011 so far, roughly the same as in all of 2009, and actually up slightly from 2010.

Still: "When the market improves and demand for high-end space increases, historical data shows that asking rents rise before concessions are significantly reduced." Emphasis ours.

510 Madison a while ago.

Business seems to be moving along at 510 Madison, the luxury office building that developer Harry Macklowe traded to Mort Zuckerman's Boston Properties last year. In addition to seeking major deals for multiple floors of office space, the building at Madison Avenue and 53rd Street is marketing to smaller tenants who would lease as little as 2,500 square feet (read: hedge funds).

"We have a great level of activity and we are willing to entertain deals from 2,500 square feet to multiple floors," said CB Richard Ellis' Paul Amrich, the rental agent for the building, at a cocktail party last night to introduce the building's small-tenant program.

The Observer, upon  receiving an invitation (apparently by accident), stopped by the party to check out the new building. As it turns out, the party wasn't open to reporters, but we got an inside look anyway.

Party guests enjoyed wine (red and white) as well as liquor on the 27th floor, which has all-around views of midtown. Floor-to-ceiling windows and glass offices (not to mention the lack of those obnoxious concrete columns) make the views nearly unobstructed, and you almost feel like you're hanging out in a cloud.

The kitchens aren't bad either, and even the smaller office suites get them. For those stressful days at the office, there is a "health club" and pool, and if you want to impress clients you can take them to the building's garden terrace or upscale restaurant.

Floor plans on display at the party illustrated different set-ups, splitting some floors into two or three different suites with varying amounts of space. To attract financial-sector tenants, 510 Madison also has floor plans for office space that can be set up for trading (essentially cramming more and smaller desks into the same amount of space).

And although the building has had its share of trouble, Mr. Amrich said 510 Madison has "leased a lot of space, thank God," adding that some tenants have moved in and they are still busy leasing.

Representatives from Boston Properties declined to comment on how many tenants have signed leases so far, but it appears as though rental agents are hopeful that appealing to a broader range of tenants will help fill the 350,000-square-foot tower that the company bought for $275 million.

"We're really trying to cater to a lot of different people, and I think the pricing reflects that," Christie Harle, who works with Boston Properties, told party guests, listing off rents north of $100 per square foot.

We're not so sure about them catering to different types of tenants per se, but it looks like they've at least inked a few significant deals from financial-sector tenants.

After months of speculation, his mercurial hedge fund, SAC Capital, is near a deal to take 66,000 square feet, or the second through fifth floors, multiple sources said. Rumors of the deal have been swirling for months, but a lawsuit by Mr. Cohen's ex-wife, which included allegations of insider trading, are said to have held up the signing. A judge threw out the case yesterday, and sources said the deal could now be signed in a matter of days.  

The huge lease—which earlier media reports said could include coveted naming rights to the building—would be a turning point for the glimmering Club Med of office towers, built and lost by Harry Macklowe to Mort Zuckerman's Boston Properties in September 2010 for $275 million. The building, with a pool and health club, has a sole tenant: Senator Investment Group, which took the 28th floor for a rent above $100 a foot in November. 

SAC Capital is currently spread over multiple floors at nearby 540 Madison and is headquartered in Stamford, Conn.

More details to follow. For now, Boston Properties declined to comment and CB Richard Ellis' Paul Amrich, the broker for 510 Madison, did not return calls for comment. SAC Capital's broker, Newmark Knight Frank's Neil Goldmacher did not respond to requests for comment. 

lkusisto@observer.com 

The move makes sense for Morrison & Foerster, since their lease at the Vornado-controlled 1290 Avenue of the Americas is up in 2012. In late 2009, the firm hired CB Richard Ellis to find 200,000 square feet of new space (as reported by The Observer back then).

If the deal goes through—at this point it's only a letter of intent—MoFo will be taking up a considerable chunk of the 843,000-square-foot, 40-story glass tower.

The move was first reported by Lois Weiss in the Post.

mcoyne@observer.com

The reality, it turns out, is nearly as dramatic: While law firm Chadbourne & Parke was mulling whether to renew its lease there, Deloitte swooped in and leased the space from under them, according to sources with some knowledge of the deal. Now the law firm, which occupied roughly 300,000 square feet, is scrambling.

For the New York-based firm, which moved from Wall Street to 30 Rock in the '70s, the unexpected move hurts in more ways than one: Several sources said the firm will likely be unable to afford a 30 Rock-style top-tier space, where asking rents are around $70 a foot, especially with prices rising on Class A office space. Moreover, moving costs will likely be over $220 per foot, a major burden to bear in a weak economy.

The firm is interested in Boston Properties' new development at 740 Eighth Avenue, sources said, where Proskauer Rose was expected to take half a million feet. Chadbourne would likely anchor the West Side tower, taking the cheaper bottom floors. But the timing looks tight because the firm's 30 Rock lease expires in 2014, and construction on 740 Eighth can't get started until the building signs a major tenants (it could reportedly be completed in 30 months). That's nerve-wracking for a mid-sized law firm with an accounting giant nipping at its heels.

You can pretty much count the alternatives on one hand: There's 1221 Sixth Avenue, where jumbo tenants are reportedly lining up around the block to fill Societe Generale's space, but no sources could confirm if the firm is looking there. The tenant hasn't looked at 3 Columbus Circle. Could it be one of the recent showings at 4 Times Square?

No parties directly involved, including Chadbourne and its broker, Barry Gosin of Newmark Knight Frank, returned calls for comment.

lkusisto@observer.com

Boston Properties, the real estate firm which the Daily News publisher chairs, on Monday pulled out of a three-way race to buy a stake in One World Trade Center, according to multiple government officials and a real estate executive. Mr. Zuckerman leaves behind just two to battle for the giant glass skyscraper previously named the Freedom Tower, currently under construction downtown: Stephen Ross, chairman of the Related Companies and the developer of the Time Warner Center; and Douglas Durst, developer of the Bank of America Tower and 4 Times Square.

Boston's rationale for dropping out after five months of talks is not entirely clear, and in a letter to the Port Authority of New York and New Jersey, which is developing the tower, Boston Properties senior vice president Robert Selsam was brief.

"Given the increasing scale of our own corporate activities, upon reflection we have decided it is best if we withdraw from further consideration," he wrote in a three-sentence letter. (Mr. Selsam declined to comment beyond the letter.)

The next steps for Mr. Durst and Mr. Ross are to pitch the authority's board of commissioners, where each are slated to give lengthy presentations to boost their bids, which call for about $100 million in investment in the tower. The authority is aiming to select one of the two in June.

The board has shown an intense interest in having influence in the selection, something of an unusual step at the agency, which, on smaller projects, typically chooses a winning bidder and then presents that choice to the board. The board is dominated by real estate executives, attorneys and others with political ties, split between appointments by governors of New Jersey and New York.

Earlier this month, in a meeting with board members, the Port Authority's staff raised some concerns about Boston Properties' financials in relation to the other two, according to a board member present. There was also discussion of narrowing the field to two bidders before the developers made presentations, according to that member, a concept that multiple people on the board disliked given that it would further narrow options.

A Port Authority spokesman, Stephen Sigmund, issued this statement:

Boston Properties has decided to withdraw from the Port Authority's selection process for an equity partner in One World Trade Center. We have very much appreciated their participation and the process has benefited from such a high-caliber organization. The Durst Organization and Related Companies remain active participants in the process and we look forward to a private sector developer playing a significant role in the long-term success of the building.

ebrown@observer.com

Not only is Mr. Zuckerman, chairman of real estate concern Boston Properties, vying for a piece of the Freedom Tower (now known as One World Trade Center), but he's also on the hunt for decidedly smaller prey, says the Wall Street Journal:

"We are struggling to find smart ways to invest our capital right now," says Douglas Linde, Boston Properties' president.

Last month, Boston Properties bought a 30% stake in the 180,000-square-foot office building at 500 North Capitol St. in Washington, a few blocks away from the U.S. Capitol building, in a deal that valued the property at about $28 million. Boston Properties paid about $8.5 million in cash, stock and assumed debt for its stake. The new partnership, which includes Boston Properties and an affiliate of Clark Enterprises, a Bethesda, Md., construction company, paid off the maturing mortgage, got a new $22 million loan, and is planning to redevelop the building so it can command higher rents.

... The company has amassed a war chest of about $1.8 billion in cash and a $1 billion line of credit to do deals.

More here.

drubinstein@observer.com