"It was controlled by a bunch of rich developers," David Gunn once said of Moynihan Station.

David Gunn was never a fan of Moynihan Station. When he was president of Amtrak during the early George W. Bush years, he pulled the railroad out of the project, which seeks to recreate the glory of the old Pennsylvania Station in the James Farley Post Office across Eighth Avenue. At the time, costs were the stated reason: Amtrak was expected to contribute to its new home, and Mr. Gunn said that the railroad had more pressing needs.

Current Amtrak President Joseph Boardman picked the project back up in 2009, and though it's largely unfunded, Amtrak still intends to go through with the move. This, Mr. Gunn told The Observer this afternoon from his home in Nova Scotia, would be a mistake.

"From a transportation point of view," Mr. Gunn said, "it makes no sense." For passengers coming from the 1/2/3 trains, "what the Farley Building does, is make you walk from Seventh Avenue all the way across Eighth Avenue. You'll have to go under the Eighth Avenue subway, then climb up to the [new] head house, which is to the west of Eighth Avenue, over towards Ninth Avenue. And then, you walk back to where the train is! The trains are still going to be between Seventh and Eighth avenues." For passengers arriving at Moynihan Station via the IRT Seventh Avenue Line, Mr. Gunn said, "they've gotta walk almost a mile." (By our estimates, a mile might be a bit of an exaggeration, but the schlep across Manhattan's long avenues won't be negligible.)

"Now the swells"—Mr. Gunn's term for the real estate interests backing Moynihan Station, including the Related Companies and Vornado Realty Trust—"they told me, 'But people come by cab!' No they don't—Amtrak passengers, a lot of them, come by subway. They're normal people."

Mr. Gunn, who has managed transit agencies in Washington, Philadelphia, New York, Boston and Toronto, noted that New Jersey Transit built a concourse in 2002 that empties out on Seventh Avenue, reflecting its closer proximity to Manhattan's center of gravity and most of its north-south subway lines.

One way to accomodate the head house at the old Farley Post Office, Mr. Gunn said, without forcing travelers from Seventh Avenue to double back across Eighth Avenue, would be to simply continue to allow passengers to board at the current station. "But they didn't want us to let people on at the old Penn Station, because I think the real estate developers had shops they wanted people to patronize at the Farley head house." (Since then, Related and Vornado have themselves wavered on the retail plan, citing a lack of demand.)

"You ask the swells why it makes sense," continued Mr. Gunn, "and they'll immediately talk about the experience of walking through the [Moynihan] head house. Real travelers—they know the back alleys. Some of the really experienced travelers, they never even go up the mezzanine. They just want to get on the train."

The project is being designed and managed by Moed de Armas & Shannon, a firm that specializes in lobby renovations and façade replacements. This may seem like minor work, but the firm has undertaken dozens of such projects in the city and elsewhere, from Lever House to the Hippodrome to First Canadian Place, Toronto’s tallest tower.

As the modernists skyscrapers of the 1960s, ‘70s and ‘80s age, they do not always do so gracefully. Tastes change, windows leak. Meanwhile, vast improvements in technology make it appealing to update buildings because their improvement performance means a better experience for tenants and cost reductions through energy and maintenance savings. Plus, it just looks nicer. And in a tight place like Manhattan, tearing a building down and starting over may be impossible, especially after zoning laws have changed, making some buildings smaller than they otherwise might be.

“This renovation will dramatically enhance the building’s street presence," Dan Shannon, one of the partners of the firm, said in a release. "We worked hard to give the building a lobby it deserves—a monumental entry sequence with timeless materials and sophisticated detailing.”

The project will transform the 15,000-square-foot lobby of the nearly block-long building (built in 1961) as well as the surrounding exteriors and is expected to be completed in the spring. Among the remaining tenants in the 2 million-square-foot tower who will be enjoying the new digs are Wenner Media (of Rolling Stone and US Weekly fame), AXA Equitable, Brian Cave, Cushman & Wakefield and Warner Music Group.

Just being neighborly.

Promises: they’re easy to make, but hard to keep. Just ask the residents and landowners of West Harlem.

For the last five years, a number of developments have been proposed along 125^th Street, but most have fallen through. Take, for instance, Vornado Realty Trust’s ambitious plans for a 600,000-square-foot office building on the corner of Park Avenue that would have housed Major League Baseball's new television network. That building never materialized, nor did a later development, planned on the same site, for a high-rise that included a Marriott hotel.

So what’s the beef? Why are so many projects along 125^th Street (as well as nearby Lexington and Morningside avenues) habitually planned and then abandoned?

The answer, according to Community Board 10's Paimaan Lodhi told Crain’s New York Business, is that developers are turned off by the empty stretches of land. “The 125th Street corridor can’t see its full potential if the majority of the lots are still vacant,” he said.

And yet, despite this series of false starts, the city is at it again, this time with the hopes of finding a developer interested in converting a 450-car parking garage near the Apollo Theater on West 125^th Street into a 42,000-square-foot retail, office, and cultural complex.

Here’s hoping they’ll follow through this time.

jschiewe@observer.com

The popular makeup company is looking to lease a roughly 1,400-square-foot space at 691 Fifth Avenue, a property owned by Vornado Realty Trust, one of the city’s largest commercial landlords.

The space is currently occupied by the skin care company Elizabeth Arden, but Vornado has been marketing the space for rents $3,000 per square foot or higher.

691 Fifth Avenue.

Though rates have risen on Fifth Avenue, the city’s priciest retail corridor, into the high $2,000s per square foot, many brokers familiar with the area say that $3,000 would set a new benchmark.

Sources familiar with the deal say that MAC is only in talks at 691 Fifth Avenue and that a signed lease has not yet been completed. The company, an edgy subsidiary of the cosmetics giant Estee Lauder known for professional grade makeup and its vibrant color palatte, is already a tenant of Vornado at 1540 Broadway. It signed a pricey lease at that building last year and has done well at the location, which is located in Times Square, one of the busiest retail markets in the city.

Given that store’s success, MAC is perhaps more at ease in considering the $3,000 per square foot price tag at 691 Fifth Avenue. Neither Vornado nor MAC could be reached for comment.

But in a ritual repeated more or less each year, the archbishop of the New York archdiocese’s 2.37 million Catholics and one of the Vatican’s most forceful spokesmen in the United States during the 1980s, was summarily ignored by a brokerage community far more interested in making deals than in hearing the Gospel.

Whether it was Mayor Bloomberg or Mayor Giuliani or a litany of governors going back to Nelson Rockefeller, guests of the annual gala have routinely been humbled at the New York Hilton’s Grand Ballroom, a cavernous space so stuffed each January with tuxedoed men and a smattering of elegantly dressed real estate women as to intimidate even the most confident of speakers. The collective chatter is fierce and formidable, and it swells to a deafening volume, with each broker hyping his or her year in deals with disingenuous aplomb.

“It almost doesn’t matter who the speakers are, because I’ve never seen—as much as I love my colleagues—a ruder group of people than at this banquet,” said Peter Hauspurg, chairman and chief executive of Eastern Consolidated and a 30-year veteran of the gala.

Affectionately referred to by seasoned vets as “The Liars Ball” for the rosy real estate projections offered up by attendees, this year’s affair, the 116th in the board’s storied existence, will boast more of the same, with brokers coughing up $1,000 per seat to schmooze, stir up new business and drink. Indeed, most confirm, they didn’t ante up for a $10,000 table simply to nosh on rubber chicken.

“It’s kind of the best and the worst of New York,” said Cherrie Nanninga, a chief operating officer at CBRE and a gala vet. “It’s the best in that it gets everybody together and it’s a real community. And it’s the worst in that … there’s no decorum whatsoever.”

The evening does start with some decorum, at least. Just before the gala commences, the REBNY Foundation holds its annual cocktail party inside the hotel’s Mercury Room, where the biggest builders and brokers in the real estate game convene for a civilized, invitation-only gathering. “That really has the top dogs in the industry, so it becomes a very clubby room,” said Mr. Hauspurg.

But then the action moves to the Grand Ballroom, where the male-dominated scene—“Like a bookie room with booze,” quipped real estate maven Barbara Corcoran—turns to the tried-and-true act of handing business cards. “It’s an active time, and a million cards are given out that night,” said Larry Silverstein, chief executive of Silverstein Properties. “Everyone walks in with stacks of cards to give out. Halfway through the evening the cards are all gone, and you say, ‘Holy shit, what happened?!’”

Armed with their stacks of cards, brokers use the gala’s program to see where in the sea of formalwear their intended prey can be found. “There’s 1,100 people and everybody has their book where everyone is seated, and people just kind of take that book and start going and visiting [people],” said Mr. Hauspurg.

The evening also has its share of overeager, albeit univited brokers desparate to break in and who, price be damned, try to sneak into the party without paying the hefty fee.

“It’s all vendors who want to crash,” said one up-and-coming broker, who has attended the gala and, in fact, snuck a few of his friends in on several occasions. “I would say the worst vendors are the ones who sell office furniture.” Crashing the parties has become less of an issue, assured some REBNY members. “There’s always guys waiting outside to sneak in and all kinds of stuff,” added Mr. Silverstein, who was chairman of the Real Estate Board of New York from 1983 to 1985. “But I think today that is rare, I assume.”

And when they’re not hunting down business, gala attendees are on the lookout for free wine, a surefire commodity in an event that features a cash bar and plenty of thirsty guests. “Wine is sort of entering the consciousness to the industry as a whole,” said Mary Ann Tighe, REBNY chairwoman and a tristate chief executive at CBRE. “In the early years of my career, the word passing [was], “Go to the Port Authority table, they have the wine.’”

In the late ’90s, to be sure, the Port Authority’s table was favorably situated in the main floor of the gala. Throw in the two million-plus square feet in vacant space the agency was looking to rent out at the time and its copious amounts of wine, and the Port Authority’s table became a popular destination for brokers thirsty for business and a free glass of tipple, several veteran brokers recalled.

“I subsequently came to realize that this was part of the Port Authority staff’s cleverness,” added Ms. Tighe. “They understood that everybody would come to see them if they had wine at their table.”

“I don’t think it was good wine,” said Ms. Nanninga, who sat at the table during her time as deputy chief financial officer and director of real estate for the Port Authority. The wine, she said, helped not in securing business, but in meeting new brokers. “The brokerage community was very, very important to us, because we were trying to establish that … you could do business with the Port Authority,” added Ms. Nanninga.

Over the years, the industry’s biggest players—and biggest oenophiles—would bring in cases of their own fine wine to the gala. Unlike the Port Authority, however, this powerful group, which has included Vornado Realty Trust chief executive Mike Fascitelli and Newmark Knight Frank’s Neil Goldmacher, was hardly as generous. “It’s always just for their table,” said one developer. “I’ve had some of it. It’s excellent.”

Mr. Goldmacher and Mr. Fascitelli did not return calls requesting comment.

When the clock strikes 10, and brokers and developers are on the hunt for the next big party (or an empty cab), another group of industry veterans has typically splintered off to the 21 Club, where wine, once again, becomes a central talking point among real estate professionals. Cassidy Turley’s Richard Bernstein and Mark Boisi, along with colleagues Robert Billingsley and Jim Fredericks, have for the past two decades used the lounge area at 21 Club to decompress with a good bottle of red wine, like Colgin Cellars or Bryant Family Vineyard’s cabernet sauvignon.

“When we come through the doors of the 21 Club and they take one look at me and the rest of my crew, they start salivating, because they know we’re going to be cracking open the wine and going pretty deep,” said Mr. Boisi.

For those looking to amp things up a notch, brokers have historically ventured to the after-parties thrown inside the Hilton by the Title Insurance Company. “It’s drinking and shooting the bull and the Title people wanting to make sure that they are in your face so that the next time you are doing a deal you are calling them up,” said one real estate figure.

The parties have also been known for being risqué in the past, according to several brokers who pointed to the ’80s as a particularly decadent era for the REBNY gala. “I’ve been to REBNY parties where the assumption of even myself or some of the women that I work with being there, we were automatically thought of being part of the prostitution crowd,” said a longtime female real estate professional, who believes prostitues were frequenting the event. “It’s not just the REBNY gala, it’s an across-the-board-thing.

“Of course you still hear about the parties and the extravagant entertaining that goes on, but it’s not on the scale that it used to be,” she added. “Maybe because of the lack of money.”

Others, however, denied the event was ever as louche as others purported it to be. “Are there beautiful people there? Yes, but I have yet to see anything more than hand-holding,” said another real estate figure.

While the evening as a whole remains like, as one real estate professional put it, “a continual bar mitzvah” for those who have been attending the affair since the Kennedy presidency, at least one young broker failed to see the silver lining of such a pricy night out.

“The whole party sucks,” the broker sniffed. “It’s $10,000 for a table and a cash bar.”

drosen@observer.com

The deal comes one month after The Commercial Observer first reported that Guggenheim was looking to take space at the building in November.

330 Madison Avenue

The company will take 186,000 square feet at the nearly 850,000-square foot-building, which the property’s landlord Vornado Realty Trust has spent over $100 million in recent years renovating.

Guggenheim Partners will relocate to the space when its current lease at 135 East 57th Street expires in 2013.

The firm will take a collection of floors in the building—8, 10, 11, 15, 18 and 32—for rents in the $70s per square foot. The term of the deal stretches for 15 years.

Vornado has drawn tenants to 330 Madison Avenue in part with an ambitious program to update the property’s facilities. The landlord, one of the largest owners of commercial property in the city, replaced the building’s lobby and facade as part of the recent work and updated systems like the tower’s heating and air conditioning.

The company anticipates receiving a LEED Silver certification at the building for the upgrades, a coveted benchmark of energy efficiency and environmental sustainability.

Guggenheim had been touring available spaces in the market for months, brokers familiar with the firm said, and earlier this year it appeared to lock up a deal at 1251 Avenue of the Americas. That transaction fell apart however when Natixis, a French bank that Guggenheim was planning to take the space from, was unable to complete a deal to move to another midtown tower, 9 West 57th Street, and hence needed the roughly 200,000 square feet of offices it had at 1251 Avenue of the Americas.

The deal at 330 Madison Avenue is a substantial expansion over Guggenheim Partners’ existing space at 135 West 57th Street, a building owned by Cohen Brothers Real Estate. According to sources, Guggenheim has less than 140,000 square feet there, almost 50,000 square feet less than what it is taking at 330 Madison Avenue.

Guggenheim’s lease at 330 Madison Avenue is the second major deal at the property in as many years. In 2010, the real estate services company Jones Lang LaSalle took about 82,000 square feet in the building for its New York headquarters for rents in the $60s per square foot.

Peter Hennessy, a top executive at the real estate services firm Cassidy Turley, represented Guggenheim in the lease. Frank Doyle, an executive at Jones Lang LaSalle, leads an agency team that handles leasing at 330 Madison Avenue. In-house leasing executives at Vornado, including the company’s director of leasing Glen Weiss and executive Thomas Costanzo, also oversee deals at the property.

Daniel Geiger, Staff Writer, is reachable at DGeiger@Observer.com

Pipe dreams. (Port Authority)

Well, our jobs just got a lot harder.

The Times's Charles Bagli, dean of the development beat, filed his second story today since mid-June, when he went on book leave—he is working on a tome about the rise, fall and rise of Stuyvesant Town. The last article he wrote was about 9/11, a date almost every reporter in the city was compelled to weigh in on, but otherwise nothing.

Today, he files a typical read-em-and-weap bombshell about the death of Vornado's decades-long Port Authority Terminal tower. The Observer reached out to Mr. Bagli and he indeed confirmed that this was not simply a scoop too good to sit on but that he was indeed very much back on the job. And so being beaten to the punch shall resume.

But last week, the developer, Vornado Realty Trust, told the Port Authority of New York and New Jersey that it had lost its Chinese investor and could not proceed with the 40-story tower over the north wing of the bus terminal, at the corner of 42nd Street and Eighth Avenue.

As a result, the on-again, off-again project may finally be dead. [snip]

Vornado was not prepared to proceed by itself. The real estate market has regained some momentum since the recession, but lenders remain skittish.

“Vornado informed the Port Authority of this recent development,” Patrick J. Foye, the authority’s executive director, said on Monday. “I expect to sit down with Vornado shortly.”

King Kong Bagli has felled another building.

mchaban [at] observer.com | @MC_NYC

510 Fifth in better days. (City Review)

While there's no official word yet on whether or not there has been any "K-I-S-S-I-N-G," it seems like some pouty lips are being puckered by both parties on the matter of Vornado's ongoing renovations of 510 Fifth Avenue, the former Manufacturer's Hanover Trust building.

As reported in The Times last week, a series of email correspondence has come to light that details a line of communication so open that it not only verges on "hand holding," it actually includes the phrase itself. the story has been picked up by Curbed and Architect's Newspaper, and it seems likely to get even more attention.

Former Landmarks Preservation Commission chairwoman Meredith Kane was retained by Vornado boss Steve Roth in advance of his acquisition of 510 Fifth last January. In her role as counsel to Vornado, Ms. Kane wrote an email to her successor, Bob Tierney, in which she implored the current chair to aid Mr. Roth's potential acquisition of the then-available 510 Fifth.

“What I think he’d most like is a little bit of hand-holding directly from you—he won’t believe it when it comes from me!" Ms. Kane wrote to Mr. Tierney, according to The Times. "That even though we have a lot of detail to work through, and you will need staff and the commissioners to be satisfied with the proposals, that we are going to ‘get through’ this project.”

Ms. Kane's unsubtle use of the phrase "hand-holding" is actually characteristic of the bold language used in a number of the emails, republished online by Curbed, but what makes the seemingly clear collusion most discomfiting to lovers of New York architecture is how controversial Vornado's plans for the building have become.

The Observer detailed the issues surrounding the renovation back in February, and the minutiae of the variously rejected plans have become even more entangled and hotly debated as the issue continues to go unresolved. And while 510 Fifth isn't the only building in the borough having troubles getting signed off on by Landmarks (as evidenced by the LPC's denial of plans to renovate the Puck Building), it now seems that it might be the only one that got behind-the-scenes pre-approval from the city agency.

So the question must now be asked if the LPC whispered sweet nothings into Mr. Roth's ear while he bid on 510 Fifth, does he have a right to be upset that the same commission is now not living up to its non-promises?

tmcenery@observer.com

What a long, strange trip it's been. (Forbes)

Sunday came and went, and still there is no deal for Vornado's Port Authority Bus Terminal tower. It has been a dozen years since Vornado was tapped to build the thing, and while the developer was poised to get to work in 2007, those plans collapsed along with the economy. The deal was set to expire this weekend, but the Port Authority has granted Vornado yet another extension to come up with a plan to make both sides happy.

"We are continuing the ongoing negotiations with Vornado," Port Authority spokesman Steve Coleman told The Observer in an email. Port Authority executive director and caster-of-long-shadows Chris Ward is expected to recommend a three month extension at the September 13 Port Authority board meeting. The extension would be back-dated to yesterday, so the new expiration date is November 7.

This would be the shortest extension yet, so whether that means it is take-it-or-leave it time, or a deal is about to be struck, was not immediately clear. Mr. Coleman would not discuss specifics of the negotiations and Vornado declined to comment.

While Mr. Ward may be able to fix the airports and the World Trade Center, here is one deal he still cannot seem to get done.

mchaban [at] observer.com | @MC_NYC

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.