Striking, but affordable? (Durst Fetner)

Durst Fetner is at work on arguably the most dynamic, certainly the least square, apartment building in New York City. Jean-Daniel Noland, chair of Community Board 4’s land-use committee, even cautioned his fellow committee members against overwrought superlatives when they considered the project last night as it entered the first phase of public review.

“We are in a house of worship, so no talk of icons tonight,” he said from behind a long table inside the Actor’s Temple synagogue on West 47th Street. “Only Jehovah can do that.”

Still, his colleagues on the committee could not resist, referring to the building as beautiful, interesting, celebrated, stunning, beautiful, attractive, singular, impressive, beautiful and destination architecture. At the end of the meeting, when a resolution was being drafted to make recommendations to the full board on what conditions it should support the project, James Wallace said, “I think we should go out of our to note the spectacular beauty of this design."

“Now, now, that’s a value judgment, and we just can’t do that,” Mr. Noland said.

“How about striking,” Lee Compton said. “Whatever your opinion, you have to admit it’s a striking building.”

Yet no matter how striking, beautiful or iconic the design, the committee could not surmount one serious issue. Despite effusive praise for Durst Fetner’s legacy, the inclusion of a grocery store, a commitment to public art, and yes, that incomparable design, the fact that the developers had committed to only 35 years of affordability for the below-market-rate apartments it was setting aside within the 740-unit pyramid-shaped struck the committee as an unconscionable act.

“The high-end architecture doesn’t do anything to keep the neighborhood diverse,” Joe Restuccia said. In other words, a façade is just a façade. Permanent affordability is forever.

Durst representatives claimed they could not, for financial and fiduciary reasons, pursue a project with unlimited affordability to it. Much of this has to do with an unusual ground lease on the development site, which belongs to the Smiley family, once one of the city's largest landlords. Now comprised of some 100 trustees, the Smileys present complex, almost impossible negotiation, according to the Dursts, and it would be difficult to go back and negotiate a deal that would facilitate additional affordability. "In a way, it's 150 units of affordable housing or none," Jonathan Drescher, director of major projects, said.

This comment particularly set the committee members off. "We've heard that so many times before, and we just don't buy it," Mr. Restuccia said. "You're going to get what you're going to get, so we have to do what we can to ensure this project serves the community, too."

Mr. Noland emphasized that this was a matter of precedent. "I think our concern is, affordable housing is an important component of this community," he said. "If you only give it a certain number of years, and you change it, we don't think that's good for the community, we don't think that's good for New York." He later emphasized that this could set a precedent whereby other developers would come in and say, well, the Dursts only had 35 years, so why should we do more.

In a way, the firm's reputation was as much of a hindrance as a help. People just expected more.

But it was also a difficult community to be operating in. On the one hand, Hell's Kitchen had benefited from a great deal of affordable housing development in recent decades, but much of it had been built with a sunset similar to the one being discussed by the developer now. "Look at Trump, many of those units aren't affordable anymore, and that is a problem we have to confront," local councilwoman Gail Brewer told The Observer after the meeting.

"What are we creating up here?" Mr. Wallace said. "Trump, Extell, now this. It's turning into an island of luxury."

The only other major concern for the community besides affordable housing was a desire to see more retail along 58th Street, where the developer has place most of its mechanical systems. Questions were also raised specifically about what might occupy a 16,000 square-foot community facility building the Dursts want to build on the street. They have proposed childcare of some sort but have no firm commitments, which the committee said it would like to see by the time the project reaches the full board in September.

Whatever the concerns, there was genuine excitement about the project on both sides. "As many of you know, we have tried to get many projects off the ground here," Helena Durst said before presenting the plan. "In fact, this is the fourth time I've come before you."

For the past 10 years, the giant hole next to West Street has been referred to as Ground Zero, a bitter reminder of the terrorist attacks of 9/11.

Douglas Durst. (Illustration by Joao Maio Pinto)

But soon after the Durst Organization partnered with the Port Authority of New York and New Jersey, and the glass-and-steel structure designed by Daniel Libeskind began to grow, that started to change. In a speech made just days prior to the 10-year anniversary of the tragic day, Mayor Bloomberg called on New Yorkers to stop using the moniker.

“The time has come for us to call those 16 acres what they are: The World Trade Center and the National September 11th Memorial and Museum,” the mayor admonished.

The building has now risen 90 floors, with 14 left to build.

“Last year we had a very successful year with the World Trade Center and we hope to continue that in the new year. This year we hope to top off the building and get it closed,” Mr. Bloomberg continued. He said the building is more than 50 percent leased.

With that project headed for completion and many others under his belt, Mr. Durst, a 40-year member of the Real Estate Board of New York, is the obvious pick to be this year’s honoree for the coveted “Bernard H. Mendik Lifetime Leadership in Real Estate” award.

Mr. Mendik, who died in 2001, was a strong and successful advocate during his tenure as the head of REBNY. Through his lobbying, he was able to successfully repeal taxes and city regulations on landlords.

“It’s a great honor,” Mr. Durst said of the award. “Bernard Mendik was a close friend of mine and a mentor in business.”

A third-generation developer in the city, Mr. Durst is a fixture in Manhattan real estate.

“When I am in Florida during shark season I can swim in the ocean because, as a New York City real estate developer, I get a professional courtesy,” he joked.

The Dursts, of course, are one of the pre-eminent real estate families in the city. His great grandfather

Joseph Durst bought his first property in 1915 on 34th Street. The Durst Organization continued to grow as it acquired more buildings in Midtown. Seymour Durst, Mr. Durst’s father, took over the company in 1974 and continued to expand, buying properties in Times Square and developing office buildings on Third and Sixth avenues.

In 1966, fresh out of the University of California, Berkeley, Douglas Durst joined the company. He teased that if he hadn’t gone into real estate he would have ended up in a radically different field. “I minored in civil disobedience at Berkeley so I would be a Wall Street Occupier,” he said.

But joking aside, that Berkeley sensibility has helped change the way New York builds. Mr. Durst has been a leader in creating more environmentally friendly buildings. In 2004, the Durst Organization replaced all the windows in its 30-story building at 655 Third Avenue with double-glazed windows that deflect glare and heat, reducing energy consumption.

The Bank of America building at 1 Bryant Park, completed in 2009, is widely regarded as one of the most environmentally friendly skyscrapers in the world. The building has advanced air-filtration systems for air coming in and out of the building. Rainwater is collected and filtered for use. The elevator system is designed to reduce riderless trips. There is a co-generation plant in the building that provides most of its electricity, and the urinals are waterless.

All of the advances, pushed by Mr. Durst, earned a LEED platinum rating for the building by the U.S. Green Building Council.

Mr. Durst said that the company is committed to continuing to build greener buildings. “In 2012, we’re going to be starting two new residential buildings, which for environmental standards surpass anything that has been done before,” Mr. Durst said. He said that new greener materials and mechanical systems will put the structures far ahead of any government requirements.

Mr. Durst’s commitment to the environment extends outside the city as well. In 1987, he purchased the McEnroe Farm in Millerton, N.Y., one of the largest state-certified all-organic produce and beef farms in the country. “The farm continues to grow,” Mr. Durst said. “We expanded it an additional 500 acres [for grazing] and expanded our meat department.”

In the coming year, the New York construction scion said he hopes to expand ridership on the New York Water Taxi.

114 West 47th Street. (Courtesy Property Shark)

But the company isn’t taking any chances. Tom Bow, the Durst Organization’s director of leasing, said that the firm will invest $18 million into renovating 114 West 47th Street, a 26-story, 660,000-square-foot property, where it will have as much as 300,000 square feet of space to lease in the coming years.

The Durst Organization has hired the building’s original architect, FX Fowle, to update the lobby. Work will also be done to renovate common space such as corridors and bathrooms.

“We’re going to be lightening up the entryway to the lobby, giving it a newer, fresher look,” Mr. Bow said. “Most of the stones and finishes will remain, but we’re going to have a new turnstyle and security desks. We’re going to enhance what is already there. The building has great bones, this is a corporate headquarters building.”

As The Commercial Observer reported, Bank of America on Friday signed a new lease at 114 West 47th Street that will significantly reduce the bank’s presence in the Durst-owned building.

The Durst Organization developed the property in the late 1980s for the U.S. Trust Corporation, a company that Bank of America acquired in 2007, and continues to own and operate the building. It hasn’t had to think much about deals at the location in recent years; U.S. Trust signed a 25-year lease when it took possession of nearly the entire building in 1989.

Last week however, Bank of America renewed for only a portion of that, slimming down to 360,000 square feet at the 26-story tower. According to Mr. Bow, Bank of America will give up about 170,000 square feet in
the renewal and the Durst Organization could have as much as 300,000 square feet of vacancy to lease at the property in the coming years.

Mr. Bow said the bank’s decision wasn’t a surprise to the Durst Organization. In recent years it had subleased portions of its space, he said, a sign that it no longer needed all of its square footage there.

In re-leasing the property, the Durst Organization would appear to have timing on its side. Bank of America doesn’t give back space until 2014, a timeframe that could allow the Durst Organization to benefit if the city’s office market continues to tighten.

In 2011, the city’s office market showed strong signs of improvement, with leasing activity at the highest level in a decade according to data released yesterday by the real estate services firm Cushman &
Wakefield. Josh Kuriloff, an executive with Cushman & Wakefield, even predicted that the market for space could be constrained within 24 months and that rents could rise dramatically as a result.

In its renewal, Bank of America committed to floors 3-15 at 114 West 47th Street, leaving the Durst Organization with floors 17-26, a more desireable block to lease because it’s the top half of the building
where tenants will enjoy better views and other benefits that come with height such as light and air.

“We like to lease buildings from the bottom up,” Mr. Bow said. “Our first priority in leasing this property was to get a deal done with Bank of America and now that that is done we’re moving onto the next step, which is focusing on the remaining space.”

The company doesn’t just have space to worry about at 114 West 47th Street. At 205 East 42nd Street, another midtown tower the organization owns, it also has a large block of empty space that it is trying to lease.

“Our vacancy rate has been in the neighborhood of 1.5 percent portfolio-wide and it will remain that way,” Mr. Bow said.

The Durst Organization owns several properties in the city and is considered one of Manhattan’s premiere landlords, with trophy assets such as Four Times Square, One Bryant Park and One World Trade Center in its portfolio.

DGeiger@Observer.com

The bank had been in discussions to extend its occupancy at the building for months. On Monday, insiders with direct knowledge of the deal and a spokeswoman for the bank, confirmed that the contracted lease had been signed on Friday morning.

114 West 47th Street (Courtesy Property Shark)

The deal is the second ancillary location to the bank’s New York City headquarters at One Bryant Park here it has significantly decreased the size of its office footprint.

According to several sources familiar with 114 West 47th Street, Bank of America in recent years has leased virtually all of the building’s roughly 660,000 square feet of space. Though Bank of America wouldn’t confirm how much space it has at the 20-story midtown building, which sits nearby to One Bryant Park along Sixth Avenue, the lease renewal would appear to be a substantial reduction in space it has at the location.

The deal follows a downsizing in Lower Manhattan in recent months. The bank inherited about three million square feet at the World Financial Center when it purchased Merrill Lynch during the financial crisis in 2008. Merrill’s space was set to expire in 2013 and there was widespread speculation in the real estate industry how much the bank would keep. Last summer, Bank of America ended up renewing only a fraction of the square footage Merrill had there, about 750,000 square feet.

The Durst Organization owns 114 West 47th Street. For a time last year, there was speculation among real estate brokers whether Bank of America could relocate from 114 West 47th Street, including rumors that the bank could take space at Four Times Square, which abuts One Bryant Park. Conde Nast, Four Times Square’s biggest tenant, is relocating from that property to One World Trade Center. The Durst Organization owns Four Times Square and developed One Bryant Park with Bank of America as its anchor tenant there. The landlord also purchased a $100 million stake in One World Trade Center, an investment that was viewed by many real estate observers as a facilitating factor in Conde Nast’s move to that tower.

Lately though Bank of America has suffered setbacks that have appeared to preclude bold real estate commitments. Last summer, the bank paid out $8.5 billion to settle claims from investors that lost money on mortgage backed securities during the downturn.

Cushman & Wakefield represented Bank of America in the deal. The Durst Organization is represented at the property by an in house team of leasing executives. Neither could be reached for comment by press time.

The board of the Port Authority, which is building the tower, today opted to designate the Durst Organization the winning bidder, although the firm still must undergo a 30-day period of negotiation with the authority to develop a contract.

Mr. Durst's bid was viewed as more traditional than that of Mr. Ross, who pitched the building, once known as the Freedom Tower, as a destination that would be complete with amenities like fitness centers (akin to the Time Warner Center, which he co-developed).

Prior discussions involved Mr. Durst investing about $100 million in the deal, and then taking a portion of the upside of the investment. The tower itself is likely to be a money-losing investment for the Port Authority, given its tremendous cost of more than $3 billion, some of which is related to security measures.

It's a rather fitting victory for Mr. Durst, given that the whole idea of the sale—selling off a stake in the tower—emerged from a meeting late last year between Mr. Durst and Port Authority executive director Chris Ward, according to multiple people familiar with the conversation. From there, the Port Authority reached out to a set of prominent developers, Mr. Durst included, to solicit their bids.

He also was a strong critic of the tower at one point, calling it in New York newspaper ads "the legacy of poor planning and decision-making by the Pataki administration." (He apparently has come around.)

Update 5:15 p.m.

Jody Durst, president of the Durst Organization and Douglas Durst's cousin sent out a statement, proclaiming "tremendous confidence," in the tower's "future success":

We are very proud to have been selected by the Port Authority to work with them on the development of One World Trade Center

... 

The building is a symbol of New York's resilience and strength and we have tremendous confidence in its future success. The World Trade Center site is, perhaps, the most complex building project ever undertaken and the Port Authority's progress on the construction of One World Trade Center is to be congratulated.

Update 5:25 p.m.

And here's a statement from Mr. Ross, expressing disappointment:

While we are disappointed and thought we offered a great vision for this iconic destination development and Lower Manhattan we wish the Port Authority and their new partner well.

The Port Authority also sent out its official statement announcing the selection. The agency will have 30 days to negotiate, at which point it will have to come back to the board to receive final approval. 

"We're extremely pleased that some of the most prominent developers in the country saw market value in this world-class office tower, and engaged in an extremely competitive process for a stake in it," Tony Coscia, chairman of the agency, said in a statement. 

ebrown@observer.com