Last year, you worked on at least three of the city’s biggest and most remarkable office deals: Condé Nast, Coach and Young & Rubicam. All said, was 2011 good for you?
Yeah, 2011 was a very, very good year for our firm. It was a very, very good year for me, personally. And all is well on the personal front. So all in all, fine.
At the beginning of 2011, did you have any inkling that it would end so successfully?
I felt pretty certain we were going to do the Condé Nast deal. Let me say it slightly differently: If we were doing a Condé Nast deal, we were well underway. I had actually thought, since we signed a term sheet in August of 2010, that we would close on the deal by very late in the fourth quarter 2010.
And yet the deal at 1 World Trade Center wasn’t finalized until May. What happened?
We didn’t sign until the third or last week in May. So what happened after we signed the term sheet in August is that we had two quarters of what I call “problem identification.”
What does “problem identification” mean, exactly?
It’s just, basically, not negotiating. You’d start to negotiate, and then, “Whoa, I didn’t know we had that problem.” And, “Whoa, where did that come from?” Because remember, the World Trade Center is a unique site. And I think I had been naive about the fact that because Beijing Vantone Industrial had signed a lease there, I had some expectation that all the questions had been answered. Here’s the simplest example of the first harbinger—which came in September—that questions weren’t answered: Condé Nast asked the question, “Where do we vent out our kitchen? We don’t see vents on the facade.”
You must be referring to Condé Nast’s legendary cafeteria at 4 Times Square, which its rumored to be replicating at 1 World Trade Center. There were problems, you say?
Yes, and they said, “We don’t see any vents on the plans.” Now, how’s that for a straightforward question? So, just showing where our heads were, I’m like, “Oh, we must have some early-stage plan,” because a big part of selling Vantone was that they’re going to have true Chinese food dining on their premises, so that when you headquarter there, you’re going to be able to eat food that tastes like the mother country.
So, I’m like, “Oh, they must know the answer to this.” P.S., the answer came back, “Oh, no. There are no vents.” And so, obviously, Condé asked the next question: “Well, then, how might we exhaust from the kitchen?” And the answer was, “We’re going to run black iron up the shaft”—truly, an enormously expensive thing to do, and also the longest black iron run in history, probably. So we now have a conversation. That’s when the bell sounded. And all of a sudden, we’re like, “Geez!” And we said, “What did you tell Vantone? What was their solution?” By the way, after we asked that two or three times, we began to realize Vantone never asked the question. So there were no solutions.
Considering that the Condé Nast deal was, in fact, signed, I assume the problem got solved?
It was because we had a tremendously gifted team leader from Condé, Bob Bennis, who is a master of design construction, and has been at Condé for many, many years. Bob walks in, and he says, “I can tell you how many deliveries a week Condé Nast gets. I can tell you how many come by messenger, how many come by tractor-trailer, how many come by van. How many people come for lunch.” This is a company that has been operational for years—for decades—and Bob is the master of this data.
Meanwhile, the deal with luxury handbag designer Coach was announced in November, but as I understand it there’s still a ways to go before it’s finalized. What’s left to do?
Everything—all the documentation and all the operational questions: How do we get in? How do we get up? What do we control? What does our signage look like? Who pays for this? Who pays for that? All of it. We have a very detailed term sheet. But now we’re in the nitty gritty phase. And we’ll see whether Coach gets done.
With both of those deals, you paint a tumultuous picture. What about Young & Rubicam?
The big surprise of 2011 was Young & Rubicam—or Y&R, as they call themselves today. Because we’ve been working on Y&R for many years, and we didn’t know whether or not we were going to solve the problem. So fortunately, the problem got solved.
What did the problem surface, and when did it get solved?
Seven weeks before it signed, because we walked into the year thinking that we had a shot to make a deal for Y&R at 1107 Broadway. And around June we discovered that the building was not going to go commercial. It had been bought out of bankruptcy and was going to be converted into a residential building. So that blew up. But the Y&R deal was used as a stalking horse, with the understanding that there was what they call a “kill fee.” If the deal didn’t happen there was a certain sum of money the bankruptcy court gave out. No one wanted the money. Everybody wanted the building and the deal. But, as it turned out, Witkoff triumphed in the auction process, which took place on one day in June. It was just one day in the judge’s chambers.
