Mixed-use development projects have become part of New York’s cityscape in recent years. But now developer Douglas Durst is taking that concept to new heights.
Mr. Durst is co-developer of a project on West 31st Street where demolition crews are clearing the way for a 58-story skyscraper that will have three separate lobbies: one for two dozen Franciscan friars, who will live and minister on the premises; another for scores of cancer patients and their caregivers, who will reside and work in their section of the building; and yet a third for hundreds of apartment renters, who will populate the tower’s upper floors.
This is an unorthodox tenant roster, to be sure. But such are the realities of the city’s modern real-estate landscape, where developers like Mr. Durst are turning to niche marketing consultants to help open their buildings to a more diversified group of tenants and walk-ins.
Coordinating the consultants’ efforts into a cohesive bricks-and-mortar whole is a task that developers like Mr. Durst have had to approach with increasing finesse over the last few years.
“It’s a challenge to make sure everybody concentrates not on their own egos, but on getting the job done,” said Mr. Durst, who is working with lead developer Sidney Fetner Associates. “With three lobbies and three mechanical systems, it was very important that we get the various consultants for the various parts of the jobs working towards the common goal of solving problems and not trying to assign blame to people.”
Of course, developers have always relied upon the expertise of professionals like zoning lawyers, architects and structural engineers to help guide their projects to fruition. And in some cases, they used retail, residential and commercial brokers to help market the building after it was finished. However, the last decade has seen these developers relying more and more on a new breed of marketing specialists who, beginning in the pre-planning stages, play a lead role in developing each component of a mixed-use project. This has had the effect of diversifying a pursuit that for the last century has been dominated by a handful of New York development families.
“Developers used to hang a sign on their buildings saying ‘Apartment and retail space for rent,’ and whoever approached the owner, that’s who they made a deal with,” said Faith Hope Consolo, a leading retail-development specialist.
But the business of development has become incredibly more sophisticated since then. Indeed, over the last decade, Ms. Consolo said, she has seen her business evolve from a traditional retail brokerage to a full-service pre-development consultancy firm.
“The development team that developers put together to market their property has become much more well thought-out, and the reason is that specialists like myself are able to tap the market more extensively,” said Ms. Consolo, who is vice chairwoman of Garrick-Aug Worldwide, Ltd.
Indeed, the term “mixed use” has changed over the last few years. It once simply indicated that a building blended office, residential and retail uses. But the mixed-use developments of the last decade have begun to incorporate more imaginative uses, like hospitality or hotels; recreation, like gyms; entertainment, like theaters and concert halls; and now, apparently, even a religious ministry involved in health care. And as each new use crops up, so does the need for a marketing specialist.
“Real estate today is more than just a bricks-and-mortar business,” said Scott Resnick, whose grandfather founded the venerable Jack Resnick and Sons Inc. development company. “Bricks and mortar are still important, but creative advertising and marketing is taken a lot more seriously by developers, ourselves included.”
It’s clear that this trend is not restricted to mammoth new construction ventures like the Time Warner Center at Lincoln Center, or the Bloomberg Tower on East 58th Street. Indeed, the mixed-use wave is now sweeping through one of the city’s most august and iconic landmarks: the Plaza Hotel. Israeli billionaire Yitzhak Tshuva purchased the building earlier this year and indicated that he intends to convert many of the hotel’s units into luxury condominiums.
And that might not be all. Jon Caplan, an executive director of the commercial real-estate services firm Cushman and Wakefield, which brokered the Plaza deal, said the new owners have not ruled out any other uses for their new property.
“It’s at least going to be a mix of retail, condo and hotel,” he said. “But they’re exploring all possibilities right now.”
And for old-guard specialists like Louise Sunshine of the Sunshine Group Ltd. and Adrienne Albert of the Marketing Directors Inc., who have been advising builders on the development and marketing of residential units for over two decades, the last few years have seen a more diversified demand for their services.
“Our role has gone from being local in nature to international,” said Ms. Sunshine, chairwoman of the Sunshine Group. “We’re involved in the pre-planning and subsequent sales for mixed-use developments from here to California, and we’re about to expand to London.”
In Mr. Durst’s case, with his yet-to-be named skyscraper project on West 31st Street between Sixth and Seventh avenues, the developer brought in Nancy Packes, president of Halstead Leasing Associates, to advise on the design and layout component of the project. He used Cushman and Wakefield to bring in the American Cancer Society, and Ken Lore of Swidler Berlin Shereff Friedman LLP negotiated on behalf of the Franciscans for their new home. (The friars owned the land and the five buildings that used to stand on the site.) This was in addition to separate architectural firms for the building’s interior and exterior. The coordination of so many development specialists was not without its complications.
“We had a difficult time in certain portions of the job getting the exterior work to everybody’s satisfaction,” said Mr. Durst. “The [interior architects] had a desire to get as simple as possible of a layout, and they were being pushed by Packes, who wanted more interesting layouts, and also by the [exterior architects], who wanted the building to have more shape and exterior reliefs.”
In the Mix
Daniel Rose, whose family name ranks with those of Resnick, Rudin, Macklowe, Malkin, Helmsley, Tisch and Durst in the roster of New York’s traditional development elite, quoted Woodrow Wilson to explain how he now handles his projects’ myriad components.
“Wilson said, ‘When faced with a difficult problem, I use all the brains I have, and the best I can borrow,'” Mr. Rose said. “Development teams today want to borrow the best brains they can to integrate all of a project’s features and have them relate synergistically.”
Carl Weisbrod, president of the Downtown Alliance and a former head of the city’s Economic Development Corporation, said the most important lesson of the last decade is that none of an individual building’s components can be afterthoughts.
“You can’t say, ‘We’re developing office space-and by the way, we’ll add some retail as well,'” he said.
Retail uses, in fact, have become so crucial to a given project’s operating income that the larger projects can even support specialists for different kinds of retail environments under one roof.
“There may well be four or five different kinds of markets being served,” said Mr. Weisbrod, “each of which requires a separate marketing approach, and which have to be linked together in some coherent program, but nevertheless have their own distinct environment and strategy.”
And not only are developments’ tenant rosters and marketing consultants becoming more diversified. So too are the methods available for developers to finance their projects.
“There’s no question that the real-estate industry is becoming more sophisticated as more and more money is being allocated from investors to real estate,” said David Arena, the chief strategy officer for Jones Lang LaSalle. Noting the rise of public REIT’s (or Real Estate Investment Trusts, which sell stock in a bundled set of properties), private REIT’s and an increasing willingness on the part of commercial banks to gamble on speculative office building, Mr. Arena said that now more than ever, “New York is where the rest of the world comes to learn” about real-estate development.
Nowhere is this phenomenon of creative financing and tenant consolidation more apparent than at the Time Warner Center. Completed in late 2003, the $1.8 billion behemoth was a joint venture of five different financial-development entities and includes a basement-level Whole Foods supermarket, a high-end three-story mall, four ultra-chic restaurants, the corporate headquarters and broadcast center of CNN, a five-star Mandarin Oriental hotel, a major jazz theater complex, and about 200 units of luxury condominiums rising out of the complex’s two soaring obelisks.
Stephen Ross, chairman and chief executive of the Related Companies, which was the lead developer on the project, once boasted that the retail portion of the center alone would make the Trump Tower Atrium-a relatively massive mixed-use project when it opened in 1983-“look like a postage stamp.” The coordination of so many consultants and constituents required a massive coordination effort on the part of Related and Skidmore, Owings and Merrill, the architectural firm that designed the building.
“It was like hell,” said T.J. Gottesdiener, an S.O.M. managing partner, only half-facetiously. “It was great tension. Obviously everyone believed that their piece was the most important part of the project …. Half the time, it was like pushing and pulling to get people to compromise fairly, and the other half it was like being a therapist.”
Sometimes the therapy didn’t work.
“Every now and then we had a stalemate, and Steve Ross had to walk in there like Solomon,” said Mr. Gottesdiener. “There would be a conflict that we couldn’t resolve; there was no architectural solution to make either one happy, and Steve had to stand there and say, ‘This is what we’re going to do.'”
Six long blocks east of the Time Warner Center stands another one of the city’s most prominent recent mixed-use developments: 731 Lexington Avenue, perhaps better known as the Bloomberg building, named after the company whose new headquarters anchor the project. Located between Lexington and Third Avenues and 58th and 59th streets, the project houses 900,000 square feet of office space, two floors of retail space, and 100 condominium units in the building’s 54-story main tower.
Vornado Realty Trust, headed by chairman Steve Roth, began construction on the building in 2001 and expects to finish next year. The project already has attracted the trendy clothing store H. and M. as its first retail anchor, and and celebrities like Beyoncé Knowles bought units even before the building opened for occupancy. (The intensely media-shy Mr. Roth declined to be interviewed for this story.)
A Stadium’s Uses
One of the most controversial planned multi-use facilities in the city is the New York Sports and Convention Center, otherwise know as the West Side football stadium. In partnership with the city and the state, the Jets intend to build a stadium that will not only serve as the team’s home but a convention center as well. In addition, the facility would house four or five high-end restaurants, a community theater, a small museum, an open-air market, and a ground-level cafe and retail space. And while some critics liken the stuffing of the facility with so many components to putting lipstick on a pig, the Jets regard the multi-use aspect of their facility as the project’s strongest selling point.
The city’s most ambitious mixed-use development project is undoubtedly the planned reconstruction of the World Trade Center. If built to the specifications of master-planner architect Daniel Libeskind, the complex will include five skyscrapers, underground retail, a massive transportation terminal, a memorial, and a cultural component featuring a performing-arts center and a museum.
Of course, even leaving aside the tragic circumstances that gave rise to its rebirth, this project is unlike the Time Warner or Bloomberg projects in that it is not a single building, but rather an assemblage of loosely linked structures. And, as such, it has many masters: the Port Authority, which owns the land; developer Larry Silverstein, who holds the lease from the P.A.; Mr. Libeskind; and Governor George Pataki, to name a few.
And although the state created the Lower Manhattan Development Corporation for the very purpose of coordinating the various competing stakeholders at the World Trade Center, the project has suffered no small share of inter-consultant squabbles and outright battles. Mr. Libeskind famously squared off with S.O.M.’s David Childs over the Freedom Tower, the tallest building at the site; memorial architect Michael Arad is alleged to have tried to wrest total control of the project away from his taskmasters at the LMDC; and Mr. Silverstein is currently embroiled in intense negotiations with the Port Authority over the fate of the underground infrastructure and retail aspects of the plan, among other issues.
Recently, the LMDC created a subsidiary agency specifically to coordinate the actual construction of the myriad projects that are commencing simultaneously.
“We expect it to be an engine for the revitalization of the broader neighborhood,” said Mr. Weisbrod, who is also a board member of the LMDC. “But ultimately the test is how these spaces are used, and whether or not they draw strength from their surroundings.”
