| NYguy |
Oct 22, 2019 7:41 PM |
https://commercialobserver.com/2019/...g-office-game/
Green Giant: Andrew Mathias on SL Green’s Changing Office Game
The REIT's president talks about three major developments and why he’s so interested in Madison Square Park
BY SARIKA GANGAR
OCTOBER 22, 2019
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On SL Green’s website, there’s a map of the REIT’s properties where miniature versions of its offices dot the New York City grid like pieces on a gameboard. The lean and sharp-angled One Vanderbilt is a few moves away from the blocky 1185 Avenue of the Americas, which is in striking distance of the stately 825 Eighth Avenue with its copper crown.
In the middle of an office game that’s increasingly being played out in new and interesting neighborhoods, SL Green has been busy devising its strategy. After all, they’re among the city’s largest office landlords, with ownership interests in about 27.2 million square feet in Manhattan alone.
Andrew Mathias, the firm’s 45-year-old president, has been busy leading that charge. The 20-year veteran of the firm has been handling a slew of new developments as the REIT plots three major additions to the gameboard. The firm just topped out at One Vanderbilt in Midtown and is turning its attention to adaptive reuse projects at One Madison Avenue in Midtown South and at 410 Tenth Avenue (formerly 460 West 34th Street) on the far west side.
Commercial Observer caught up with Mathias at the firm’s sleek Midtown headquarters to discuss the firm’s new blockbuster projects
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You’re getting ready to kick-off construction next year at One Madison. Can you talk a little about your vision for the project?
We conducted a big study in terms of the different variety of opportunities and uses we could explore in the site. And we settled on a plan with KPF, who we have a deep relationship with from One Vanderbilt, on this very exciting reuse of the base of the building, but demolition of three floors at the top, and then building this new spectacular glass office building; sort of melding an older, traditional look at the base with enormous floor plates, with this very modern glass office tower.
So that has generated a lot of excitement both within the firm and also within the tenant community, because I think it’s really what the tenants in this area are looking for; sort of that juxtaposition of old and new — as opposed to just new glass and steel, which is great and efficient and for a lot of tenants fits the bill. But I think part of what attracted tenants historically to Midtown South is a little bit more of the fabric and masonry and the streetscape feeling like it’s a little bit more older New York.
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What other uses did you consider for the site?
The zoning is very flexible, so we could have done residential or hotel or commercial. But the area has a tremendous need for office space, there’s just a real lack of newer buildings offering modern space and modern amenities. And because of that demand, we really felt like office was our best use.
What will One Madison be bringing to the table for tenants?
I think we’ll certainly have some of the largest floor plates in the area in the base of the building. And that is definitely a big attraction to the types of users that are doing more open-plan spaces, less offices, and more traditional [uses] like a trading environment or a technology environment. So, we think those base floors will really appeal to those users.
We’re going to open up some of the park-facing frontage on Madison with new glass to really bring some more light and more views to that side of the building. And then the tower is going to be just a spectacular, column-free, glass space with the latest technology to really be able to accommodate the technology-type or finance-type user.
Does that help you compete against offices in Hudson Square, which has access to things like the transatlantic cable?
I think that [One Madison] has a lot of infrastructure from Credit Suisse and MetLife before it, we’re going to piggyback on that infrastructure, enhance it, and I think we’ll compete well with Hudson Square and a bunch of those areas.
This is prime core in the center of Manhattan; it’s arguably a better location, then some of those outlying areas, because we’re on Madison Square Park. You have all these tremendous corporations in the area, amenities in the area, hotels and restaurants.
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We’ve heard you already have tenants kicking the tires on the building. Who’s been looking?
It’s definitely technology and finance, the TAMI [technology, advertising, media, information] sector and the FIRE [finance, insurance, real estate] sector. You have Credit Suisse and Sony at 11 Madison, so there’s a juxtaposition of a technology user and a finance user. And I think this building will likely follow suit.
We’re seeing finance, probably more so than we expected, look here. And as these finance companies all migrate towards becoming fintech companies, the line between finance and technology is getting blurred a little bit. Big technology groups within JP Morgan, within all these commercial banks, these technology groups a lot of times will locate in satellite locations away from the main offices. So, you see that with JP Morgan, their technology group is headquartered at 450 West 33rd, or 5 Manhattan West as it’s called.
We’re talking to some interesting big financial players and some of their fintech groups about potentially locating within the building. And then obviously, large technology players who are really attracted to this neighborhood and see this as a key recruiting tool to really get the best talent, by having a great location and the best office, we’re talking to a lot of those users as well.
Rents at One Madison are expected to start at $100 per square foot and average around $130 per square foot. How you see rents trending for newer construction in Midtown South?
Technology companies are becoming more accepting of rents for new construction in Manhattan, and that it just costs a lot of money to deliver these buildings. So they can’t have modern infrastructure and modern space at $60 or $70 per square foot, which is historically what they want to pay in these areas.
I think what you saw with Microsoft on Houston Street, and what you’re seeing increasingly even with Facebook at Hudson Yards, the rumored rent on that deal, I think these companies are getting their heads around paying a fair rent, but a higher rent, for new modern space.
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