Public Financial Management, which does business as PFM Asset Management, is taking 9,263 square feet of turnkey space on the entire 49th floor of 40 Wall Street, brokers involved with the transaction exclusively told The Commercial Observer yesterday. Asking rents were in the low $40s.

40 Wall Street

A Cushman & Wakefield team lead by Jeffrey Lichtenberg that includes Jared Horowitz, Gabe Whitman, Courtney Adham and Andy Peretz represented the Trump Organization in the deal.

Jonathan Mayeske and Jonathan Fein, also of Cushman and Wakefield, represented the tenant.

Leasing activity continues to flourish in 40 Wall Street, which just years ago faced daunting vacancies and unsteady management. Donald Trump, Jr., who has had 40 Wall Street under his stewardship for the past few years, helped turn the asset into an appealing office tower by offering favorable deal incentives. PFM Asset Management received 5 months free in its lease deal with 40 Wall Street, said those close to the deal.

Mr. Trump is the brother-in-law of Jared Kushner, who owns The Commercial Observer.

Mr. Lichtenberg, who heads the exclusive Cushman and Wakefield leasing team for 40 Wall Street, said the building had three more deals in the pipeline, all for pricier space at a higher part of the tower, that is was close to finalizing.

“There’s a lot of activity,” Mr. Lichtenberg said. “Everybody’s bitching that activity’s dying, and we’re as hot as can be."

Companies like Duane Reade, the Harry Fox Agency, and Leslie E. Robertson Associates have all inked big office leases at the building. Duane Reade also inked a deal this year for ground-floor retail.

While activity is picking up, there are challenges that lay ahead for Mssrs. Lichtenberg and Trump.

Insurance firm CNA is set to move out of its office space (at a size of up to 135,000 square feet) on March 31st, two years before its lease expires.

But there are a few deals afoot for the building, including a couple of deals in the soon-to-be-vacant CNA space, and the aforementioned deals in the tower portion of the building.

Freshly tanned from a recent visit to Mexico, where he was overseeing a new project, the slicked-back scion grew steadily more enthusiastic as he discussed 40 Wall Street, an office tower that, with its rising and falling tenant roster, has contributed to the Trump Organization executive vice president’s growing reputation as a competent steward of the family name, a reliable fixer and successful dealmaker in his own right.

Donald Trump Jr. (photo credit: Hannah Mattix)

“When I took over the building, there was a lull in the market,” recalled Mr. Trump, who said the address remains one of his well-known father’s favorite properties. “By the time we fixed everything up and got it going, there was a high. It was certainly a unique experience. My focus had been on residential development as well as some resort hotel development, so to learn that part of the business and to spend time with that part of the business was fascinating to me. So I got involved and made it a big part of my day-to-day life.”

Indeed, 40 Wall Street had languished in the Trump portfolio since the mid-’90s, when family paterfamilias Donald Trump purchased the building from Kinson Properties, a Hong Kong-based company. Back then, internal discussions raged on whether to convert the office tower into residential property or to keep it as offices, according to insiders. The senior Trump eventually settled on keeping it as an office tower, and nearly 20 years after that decision, 40 Wall Street’s fortunes fell on his oldest son, who until then had never managed an office building.

(Disclaimer: Mr. Trump is the brother-in-law of Observer Media Group owner Jared Kushner.)

The junior Trump had spent much of his career overseeing a stretch of luxury developments along the West Side rail yards. He then jumped from project to project, working on construction of Trump International Hotel and Tower in Chicago and handling Trump licensing deals across the world.

But managing an office building as storied as 40 Wall Street, until recently known among tenant brokers as a difficult place to do business in part because of at least one Trump executive’s heavy involvement with leasing at the address, was entirely new to Mr. Trump.  

Now faced with his first-ever office-building management assignment, Mr. Trump made a strategic play to woo brokers, who, perhaps more than anyone else, had the leverage to sell 40 Wall Street to potential office tenants. “I look at the brokerage world as your unpaid sales force until they perform,” he said. “What I wanted to do was befriend those people, get to know the players.”

He reached out to Jeffrey Lichtenberg, an executive vice president at Cushman & Wakefield who had worked with the Trump Organization in the past. Mr. Lichtenberg and his team were eventually brought on as the exclusive leasing agents for 40 Wall Street, and from there, they courted other big brokerage firms to rouse up business.

“What we did was, instead of having one big party, we had a series of lunches with each firm,” said Mr. Lichtenberg. The message, brokers on both sides of the table said, was simple: 40 Wall Street was open for business. It wanted to work with brokers and it wanted new tenants.

“Because Don was cooperative and helpful to me and then we were cooperative to the brokers, the brokers realized that the best place for them to bring a tenant to get a deal done was 40 Wall,” added Mr. Lichtenberg. “Don helped turn around the image of the building.”

What also helped spur leasing activity was Mr. Trump’s willingness to sweeten the deal by offering incentive packages. He also kept a simple pledge: if a broker brings in business to 40 Wall Street, he would make honoring that broker’s commission a top priority.

“If I tell them I am going to do something, I am going to do it,” said Mr. Trump. “If I tell them that they’re going to get their commission check on this moment, they are going to get it on or before this moment,” he added, hitting the table with an index finger for emphasis.

That pledge worked. Jones Lang LaSalle broker Dan Suozzi, who had lunch with Mr. Lichtenberg and his team at Bobby Van’s during that recruitment period, estimates he has brought four tenants to 40 Wall Street in the past two and a half years, the most recent being John Carris Investments for roughly 13,000 square feet. (Former New Jersey Governor Jon Corzine was rumored to be subleasing space from John Carris.)

“Don Jr. was a pleasure to work with and he does the right thing and is very personable,” said Mr. Suozzi. “It makes a difference when you’re bringing a tenant through the building.”

Once they had the ears of intrigued brokers, Mr. Trump and his team focused on redefining 40 Wall Street’s image as a financial services asset. “With the Wall Street address 10 years ago, it was all financial industry,” said Mr. Trump. “Today, in the digital age, the street location is less critical.”

Mr. Trump also honed in on what his family’s building could offer that his competitors couldn’t. He targeted a crowd that didn’t fit the traditional mold of a Wall Street tenant, selling them on 40 Wall Street’s “impeccable” management services and attractive deal incentives. The Trump Organization has a “fungible” balance sheet that enabled it to offer value propositions, he added.

Wall Street address aside, 40 Wall Street had the charm of a Midtown South building with Midtown South amenities. It had recently renovated tons of turn-key space, and it had a Duane Reade megastore, the first of its kind that, with its sushi bar and a hair salon, could give the average customer a new ’do with her bottle of Kaopectate.

“With the Condé [Nast] deal and with everything that is going on downtown, I think it’s an opportunity for buildings to have boutique space they can do something with and offer that value proposition to tenants that are going to be the guys who are going to feed off those megadeals,” said Mr. Trump.

The offer worked. Midtown mainstays like the Harry Fox Agency and Duane Reade committed to the building for substantial office space, each with square footages in the five figures. Wiedlinger Associates and Leslie E. Robertson Associates also moved into the building.

“I had never done a deal with the Trumps in my 18-year career,” said Greg Taubin, a senior managing director at Studley who represented the Harry Fox Agency in its 47,144-square-foot sublease on the fifth floor. “You would always hear different things about having to deal with the organization, but those days are over. The reason is because of Donny Jr. getting involved and making decisions.”

Now faced with tenable vacancies in the base of the building, nearing a total of 100,000 square feet, Mr. Trump is enjoying his time at 40 Wall Street while also working on the development of Trump International Golf Links in Scotland.

“What makes my job interesting is that on any given day I can work on something that’s totally different,” he said. “It keeps things very interesting and fluid.”

drosen@observer.com

Duane Reade will be taking the 21st and 22nd floors, for a total of 54,500 square feet, inside the 72-story building. The lease is for 15 years, with asking rents in the mid-$30s per square foot, several brokers said.

40 Wall Street. (Courtesy Property Shark)

Jeffrey Lichtenberg of Cushman & Wakefield represented the Trump Organization in the deal. Thomas Murray and Joseph Artusa, both of the Lincoln Property Company, handled Duane Reade.

Duane Reade’s current lease at its corporate headquarters at 440 Ninth Avenue was nearing its August expiration, prompting the pharmacy to look for new space in midtown, midtown south and Lower Manhattan, said Mr. Murray.

It was sometime after Duane Reade opened up its approximately 22,000-square-foot flagship at 40 Wall Street—which has a grocery space for smoothies and sushi and a special salon section that offers hair blow-outs and manicures—when it dawned on the company that having its corporate headquarters and superstore under one roof was the most logical choice, according to those familiar with the deal.

“The location is perfect, it laid out well for them and then, on top of that, there was the superstore,” said Mr. Murray.

Dealing with 40 Wall Street’s well-known landlord also helped seal the deal, said Mr. Artusa.

“Donald Trump Jr. was a complete gentleman throughout the entire process and was helpful in expediting the deal,” he said.

This has been a busy leasing period for Mr. Lichtenberg and his team, which have brought in the structural engineering firm Leslie E. Robertson Associates, financial consulting firm Huron Consulting and Weidlinger Associates, another structural engineering firm, in the past six months.

“The vacancy [rate] right now is about 18 percent,” said Mr. Lichtenberg. “It was close to forty percent when we took control [two and a half years ago],” he added.

Daniel Edward Rosen, Staff Writer, is reachable at DRosen@Observer.com and can also be followed at Twitter.com/Dedwardro.