And commercial, too. (CPC Resources)

Union Square too expensive for your tech start-up? DUMBO too full? Downtown Brooklyn too... Downtown Brooklyn? Jed Walentas has a new suggestion: how about the Williamsburg waterfront?

Two Trees is looking to return to its commercial roots at the old Domino Sugar factory site, The Wall Street Journal reports. Jed wants to convert the 11-acre site's signature structure into office space and throw up a new office building, for a total of 630,000 square feet. If successful, that would be nearly twice Williamsburg's paltry existing stock of 350,000 square feet of large-block space.

In explaining why, he took a dig at the rest of the waterfront and Long Island City to the north, which lack the vibrancy of mixed use developments. "They don't make great urban places," he told The Journal. "They don't integrate into the neighborhoods."

And to sweeten the pot, Two Trees is looking to offer the space with a massive subsidy: office rents will average about $25 a foot, or about half the price of space in midtown south. (Jed told The Journal that he thought he could get four times that for apartments.)

The Walentases are no strangers to taking a loss on one part of a project to boost another—back in the early days of DUMBO, David Walentas gave 100,000 square feet of free space to arts groups to liven up the neighborhood. And while Two Trees is waiting to develop one of its inland lots on Kent, it's looking for "creative interim uses" for the long-vacant 55,000 square foot property.

"You're drawing people largely from that community," Sean Black, a broker at Jones Lang LaSalle, told The Journal. And with good reason—both the Bedford Ave. L and the Marcy Ave. J/M/Z stops are a three-quarters of a mile walk from Two Trees' site down under the Williamsburg Bridge.

The plan would have to go back through the zoning ringer, though local councilman Stephen Levin seemed warm to the idea, telling The Journal: "I'm supportive of mixed-use development all up and down the waterfront."

To the ramparts. (Matt Chaban)

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.

Take a tour of 3 Columbus Circle with Joe Moinian >>

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.

The grand old dame. (Getty Images)

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.

The spruced up goose. (Moinian Group)

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.

Grade-A, Class-A. (Matt Chaban)

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."

mchaban [at] observer.com | @MC_NYC

Joseph Chetrit, right.

One summer Friday in 1994, Ron Cohen, one of the top commercial brokers in New York City, picked up the phone in his office at the old Insignia/ESG, a precursor to today’s mega-brokerage CB Richard Ellis. A man named Joseph Chetrit was cold-calling him about a 16-story office building at 19 West 44th Street that Mr. Cohen’s client was selling.

“Sorry,” Mr. Cohen said. “We don’t work with people we don’t know.”

He hung up and went back to work.

Minutes later, three men walked into Mr. Cohen’s office. They were Joseph Chetrit, his father Simon, and his brother Jacques.

“Well, now you know us,” Joseph said matter-of-factly.

Within a few days, Mr. Cohen was in Connecticut, meeting with his client and helping broker what would become Mr. Chetrit’s first commercial real estate deal in the United States: $13 million for the 231,928-square-foot building between Fifth and Sixth avenues. Mr. Cohen would go on to work with the Chetrits—Joseph, his three brothers and his father—on several more deals, here and in Philadelphia.

Like all those in the real estate industry interviewed for this story, Mr. Cohen, now with Jones Lang LaSalle, spoke of Mr. Chetrit in laudations, painting a portrait of a discreet and coolly shrewd negotiator: “He’s a brilliant, brilliant person.” Another source: “He is aggressive, but not abrasive.” And another: “I wouldn’t say he was a Type A personality. He had a presence—I wouldn’t say it was a verbal presence.” Finally, another: “Chetrit is not about being on the front page of the paper.”

Instead, he is known to be part of that nebulous group of New York real estate moguls wary of the attention garnered by the likes of Douglas Durst and Bill Rudin. Mr. Chetrit has more in common with men like Lloyd Goldman, perhaps the city’s biggest individual private landlord, who takes the subway to inspect his dozens of buildings, and Ruby Schron, who controls his estimated 15-million-square-foot empire from Brooklyn, with the help of several sons. They deal in the shadows, content to cultivate auras of savviness and even fear, emerging only reluctantly. Characteristically, Mr. Chetrit and members of his family, a Moroccan clan who made their initial money in textiles, did not respond to several interview requests.

But for a man who seems to so thoroughly eschew the spotlight, he continually scoops up very high-profile properties, including one of the most famous buildings in the world, the former Sears Tower. Most recently, he acquired one of New York’s most notorious properties, the Chelsea Hotel, for $80 million in May.

While Mr. Chetrit and his family seem to have navigated the past three years relatively unscathed, the Chelsea deal casts the spotlight on a firm confronting a host of troubles just as the recession seems to be abating in New York. He currently faces special servicing (a pit stop toward foreclosure) on a large downtown office building, a hurried stake sale for his most prominent possession, and the effects of a discrimination lawsuit from a former employee that provides details of life inside the Chetrits’ orbit.

JOSEPH CHETRIT EMERGED 20 years ago in New York, the brother sent to America to further a family’s fortunes, first through apartment buildings in Brooklyn and Queens, and then through commercial property all over, ascending by the middle of the last decade to the peak of real estate in this country. He had a rocky start in the U.S. as an importer/exporter of textiles. In early 1990, he pleaded guilty to one felony count of violating customs laws and was sentenced to three years’ probation. The wrist-slap may have turned his attention to something more substantial than fabric.

He began with outer-borough residential properties, spinning together a portfolio that sold for $70 million at the tail end of the early-’90s recession. With that money, he turned to commercial properties, starting with the West 44th Street tower in 1994.

Through that decade and into the next, as the commercial real estate market took off, Mr. Chetrit took his empire national from a 400,000-square-foot warehouse in Philly to Giannini Place in Los Angeles, the birthplace of what became Bank of America. Mr. Chetrit bought low, sold high and repeatedly made a killing.

During this run, he reportedly made hundreds of millions and had staggering amounts of cash at his disposal. One broker remembers Mr. Chetrit’s proving his solvency to a potential seller by showing him his checking account balance: $100 million. He also reportedly used financing from Wachovia—but, mostly, it was his family’s wealth and that of his partners.

In 2004, the family name was planted atop the summit of North American real estate. With a down payment of $30 million, Mr. Chetrit led the $840 million purchase of the 110-story Sears Tower in Chicago with partners that included Lloyd Goldman, Joseph Moinian and Jeffrey Feil, a New York landlord. (Mr. Feil declined to comment for this story; Mr. Goldman could not be reached; and, through a spokesman, Mr. Moinian offered a typically positive statement regarding his partner. The ownership group would change the tower’s name in early 2009, after the British insurance brokerage Willis signed a major lease.)

The deal gave Mr. Chetrit his first taste of major press, but he doesn’t appear to have found it particularly sweet: Of all the reams run on the Sears Tower trade, none appear to contain an interview, or even a comment by phone, from the elusive Mr. Chetrit. The Observer did eventually learn that he was born in Morocco in the 1960s; he speaks four languages—Arabic, Hebrew, French and English; he is married to Nancy Chetrit, and they have four children; he practices Orthodox Judaism (his former rabbi described Mr. Chetrit as “an extremely generous and warm person”); and he recently moved from a mansion in Engelwood, N.J., to the city. But his life revolves primarily around the deals.

By the peak of the real estate boom in 2007, Mr. Chetrit’s sprees were titanic even by the frothy standards of the age. In New York City alone that year, according to an analysis by The Real Deal, he bought the old Standard Oil Building at 26 Broadway for $225 million; a row of mixed-use buildings at 855-871 Sixth Avenue for $140 million; a former nursing home at 1760 Third Avenue for $80 million; the N.Y.U. buildings at 90 and 100 Trinity Place for $64 million; the 21-story office building at 989 Sixth Avenue for $49 million; the office building at 240 West 37th Street; six contiguous townhouses at 110-120 East 76th Street; and three properties on Metropolitan Avenue in Williamsburg. He also sold the old home of the Daily News, the so-called Death Star at 450 West 33rd Street, for $700 million; and the old International Toy Center at 200 Fifth Avenue and 1107 Broadway, for over $700 million.

All totaled, he made nearly $2 billion in trades. The momentum seemed unstoppable.

THE 15-STORY 200 FIFTH Avenue and its neighbor via skywalk, the 16-story 1107 Broadway, were for most of the 20th century the nexus of the American toy industry. Hasbro and Mattel had offices there, and the building’s annual Toy Fair drew hundreds of hawkers. Mr. Chetrit ended all that. In early 2005, his group bought the buildings for $355 million. Given the location across from Madison Square Park and the fact that Manhattan apartments had the year before, for the first time ever, begun selling for an average of $1,000 a square foot, he planned a condo conversion at 200 Fifth.

First, the toy tenants would have to go—though not without a fight. Dozens sued Mr. Chetrit, alleging harassment: toilet paper wasn’t replaced in the bathrooms; the A.C. was cut in the lobbies and hallways; a lot of the elevators were shut off. According to a New York Post story at the time headlined “Rage in Toy Land,” a Manhattan judge said during a hearing: “In the old times, they used to send people to beat the crap out of people [to get them out]. We have gotten a little past that but not as much as I would like.”

It was Mr. Chetrit’s first round of bad press in New York. Even so, he managed to stay mostly in the shadows until he unloaded both buildings for $715 million in 2007. (Keeping with a general theme, David Jaroslawicz, the toy tenants’ attorney, spoke only well of Mr. Chetrit when reached by The Observer: “Tough negotiator—when we shook hands, he kept his word … He was not a screamer and a yeller.”)

The Toy Center fiasco might have been a tipping point for Mr. Chetrit, but, as Lehman Brothers pulled the economy under, he seemed to weather the ensuing storm better than most. Mr. Moinian, his sometime partner, faced debt problems on several buildings. Kent Swig, Harry and Billy Macklowe, Tamir and Alex Sapir, and even Speyers (see: StuyTown foreclosure) faced high-profile property troubles in 2008 and 2009.

It seems, however, that Mr. Chetrit was not immune to the downturn, but just late to its effects. His 123 William Street, a 27-story downtown office building acquired in July 2005, went into special servicing in May of this year, with $79.6 million in outstanding debt, according to research firm Real Capital Analytics. Five Beekman Street, a 10-story office tower, also downtown, has actually been foreclosed upon.

In early June, too, the Chetrit Group and its partners on the Willis (née Sears) Tower announced they were looking to take on another partner—or to sell the icon altogether, relinquishing Mr. Chetrit’s shiniest trophy. Also in June, he and two partners, including Yair Levy—a local developer perhaps best known for once hitting Mr. Swig with an ice bucket during contentious talks—put up for sale the Bed Bath & Beyond building at 620 Sixth. Finally, the Chetrit brothers recently settled a discrimination lawsuit with a former employee who alleged he was hired because he was Jewish but later marginalized because the Chetrits learned he was not Orthodox.

The Chelsea.

AS FOR THE CHELSEA HOTEL, Mr. Chetrit’s highest-profile buy since the Willis Tower in 2004, no one expects it to go the way of the Toy Center, a seemingly ceaseless loop of litigation that ends with its sale. In fact, a broker who has worked with Mr. Chetrit says that he remains interested in keeping it a hotel. He might spruce up the notoriously ramshackle creation dating to 1883, add some space on the ground floor by eliminating storage or by revamping the rooms to rid them of their spinster-aunt quality. Gene Kaufman, best known for work with hotel chains like Holiday Inn, will oversee any changes.

“When I first walked Chetrit through the hotel, he got it immediately,” said Doug Harmon, a top broker with Eastdil Secured who marketed the hotel and who also handled the $1.9 billion sale of nearby 111 Eighth Avenue to Google. “He has a keen aesthetic and a talent for transforming and repositioning all different types of real estate.”

But it’s a powder keg of a building, and certainly won’t keep Mr. Chetrit’s name out of the papers. Just one example—in the tumultuous wake of the ousting of long-time manager Stanley Bard in 2007, the new manager called the NYPD bomb squad to check a suspicious package sent to him; it turned out to be a fish head.

According to a source, no announcement as to the Chelsea’s fate under Mr. Chetrit is expected this calendar year, which will no doubt keep the speculation in the press very much alive. For now, it sits as always on West 23rd Street, blood-red and eccentric, the latest enigma involving the mysterious man from Morocco.

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.

With tech companies popping up in new offices faster than tweets on our Twitter feed, it never occured to us it's actually not easy for them to find space.

But many landlords in the city were burned when the last tech boom went bust and dozens of tenants couldn't pay their rent. So when GroupMe, a bunch of recent college grads who've just received more than $10 million in funding for a new mobile app, went looking for more space, they had to sell potential landlords that their product had staying power.

"We really had to pitch the landlord," said Slater Traaen of the Kaufman Organization, who represented the tenant. "They said to me afterwards: 'We had to go through a harder pitch than with strategic partners or VCs [venture capitalists].'"

GroupMe has just leased 5,300 square feet in the Winter Organization's 26 West 17th Street in the Flatiron District, a.k.a. Silicon Alley. The asking rent was $37 a square foot and terms of the deal weren't disclosed. 

GroupMe currently has around 15 employees, and wants to double in size to 30 by the end of the year. They were subleasing some desks from another social media firm, but this is their first permanent space.

So what was the hot app that ultimately persuaded the building's leasing director, Robert Fink? Founded at a Hackathon in 2010, GroupMe allows you to text a group of friends at once, similar to reply all on an e-mail. You can also save groups of contacts, like "family" or "soccer friends." Even we luddites clinging to our salmon-tinted pages can see how that might be useful.

lkusisto@observer.com

The Southern painter-cum-interior designer has taken 22,500 square feet for 10 years at 509 West 34th Street, past 10th Avenue. The four-story industrial building over a parking garage has a few columns and windows on three sides, offering the perfect canvas for his famed Gothic interior styling.

"Some people are great in an industrial space," said Carri Lyon of Cushman & Wakefield, who represented the tenant. "He can transform any space," she said, citing his work on an unremarkable 25-year-old office installation on 10th Avenue, formerly "one of the most horrible spaces in New York City."  

Not so of this loft space in a Sherwood Equities building, which was occupied by a prop house. "He works on large canvases and he has a lot of furniture. He needed more space," Ms. Lyon said. "This just came up. It was serendipitous." 

Mr. Slonem will relocate from 545 West 45th Street, as it seems that the far West Side is being increasingly won by creative tenants. Just downstairs from Mr. Slonem's new space, another artist is opening a 22,500-square-foot studio. 

lkusisto@observer.com 

Update: We should note, that while Mr. Slonem's unparalleled eye is much in demand, his decorating services are not currently for hire. 

The Observer has learned last week that someone was coming to fill the empty space, which would amount to more than 250,000 square feet, or 180,000 square feet of contiguous space. SL Green bought the little building that couldn't no more from the Sapir Organization last January. For more than a year, it was said to be the emptiest building in Manhattan, until HealthFirst signed a 172,000-square-foot lease in the summer. Niche Media also occupies a modest space.

A snazzy media tenant like Sirius would, however, lend some much-needed pizzazz to the building once famed for its collection of octopean chandeliers. Ever since the city's largest commercial landlord took over, it's been the victim of a renovation that's done little to appease its critics. 

Another source confirmed Sirius' interest in the building, but said the deal isn't done. We've put out our own tentacles, but so far no more details are forthcoming. The landlord's brokers, a Newmark Knight Frank team of Brian Waterman, Jimmy Kuhn, John Fanuzzi, Hal Stein and Lance Korman, declined to comment.

lkusisto@observer.com 

The influx of capital at 681 Fifth Avenue, a prime retail spot whose tenants include Tommy Hilfiger, will be used to pay off any outstanding debt and to fund additional pre-built floors in the 17-story mixed-use tower, owned by Metropole Realty Advisors. The 19th-century building has been experiencing a comeback of late, since the completion of a $20 million renovation in 2010, including a bright-white new facade. Vision Capital Americas and Global Thematic Partners both signed full-floor leases.

The loan was provided by Ladder Capital Finance. Peter Smith, of Ladder Capital, worked with Robert Siegel and KT Bren of Metropole Realty. Malkin Strategic Capital provided a $25 million mezzanine loan. 

lkusisto@observer.com

The little blue bird has been perching in a spartan temporary New York City space since September, searching for the perfect spot for its first New York City headquarters. Now The Observer has learned that it plans to sublease Facebook's former digs at 340 Madison Avenue, according to a source with knowledge of the deal.

Facebook first leased 11,000 square feet on the sixth floor of the glass birthday cake-shaped building, wherein the Office of the Comptroller of the Currency was also housed, in 2009. It fled recently for some similarly corporate two-floor digs just down the street at 335 Madison, where it could expand to as much as 150,000 feet.

The Grand Central area, a hub of finance wonks and high-end insurance law firms, is far from the lofty spaces and hip organic sandwich joints techies have long preferred. But with the world's two most powerful social media companies potentially just blocks from one another, for better or for worse, it seems only a matter of seconds before the classy office strip is dubbed Silicon Avenue (there, done). The recent deals also place both companies near the once throbbing heart of the advertising industry so lionized by Mad Men and so slowly being supplanted by tweets and friendings.

The deal is said to be a few weeks away. For now, Twitter and its broker, Clayton Kline of Jones Lang LaSalle, declined to comment. Scott Rechler's Long Island-based RXR Realty, which purchased the building for $570 million in the spring as its first Manhattan investment, also declined to comment.

lkusisto@observer.com

The Christian liberal arts college currently houses its administrative offices and classroom space in 50,000 square feet on the concourse and lower levels of the iconic tower, controlled by Anthony Malkin's W&H Properties, but their lease expires in 2012, a source with knowledge of the deal told The Observer. "From a branding and a building recognition standpoint," said the source, "they love being in the Empire State building."

Negotiations for the renewal and expansion are "moving slowly" one source told The Observer and another called them "preliminary," but the deal could be wrapped up by the summer. One person said the negotiations have moved slowly while the landlord focused on the huge Li & Fung deal and also possibly on putting an Equinox gym on the lower levels. The latter deal was apparently killed.

Even without the gym, the expansion could prove a challenge: Floors in the building are around 60,000 square feet each, but other retailers, such as Bank of America and Heartland Brewery, are eating up some of the lower-level space with staircases to the basement.

King's College, which was founded in New Jersey in 1938 but moved to New York City in 1999, wants to stay at the famed address—which if nothing else makes it unlikely freshmen will get lost. "What's great," said one source, "is the Empire State Building is truly back on the map as being a desired place to do business after so many years of being passed over by the marketplace because it was seen as a neglected building."

UPDATE: Cushman and Wakefield is leading the assigment representing King's.

lkusisto@observer.com