Friday, January 7, 2011

Themed redevelopments, Test Pattern, Restaurants

I was talking with a developer friend of mine last week.  He was telling me about an office building he and his partners own that has some good size vacancy.  There’s a lot of vacant space in the market they’re in and while their building is competitive there just haven’t been that many tenants snooping around.  Then he told me their solution.  It was close to my heart as I have used ‘themed leasing’ in a few ‘challenged’ projects I’ve worked on over the years.  His solution:  lease to non-profit entities and call the building “The Non-Profit Center.”  When they looked at the numbers they realized that they could make money by lowering the effective rent almost to the level that the lead non-profit’s budget could absorb.  The tenants take the space as is (it had been previously occupied and has some very respectable improvements).  It’s a sensible approach to leasing, especially in a market like this.  What it fondly reminded me of was 99 Hudson Street, New York (Tribeca).  It is a 160,000 sf, 16 story building.  When the fellow I worked for at the time, Mort Olshan, bought the building with Marshall Rose and Fred Gould, we handled the management/leasing/construction.  It was the early 1980’s.  Robert DiNiro was living there, in the top two floors of a bank building on the corner of Hudson and Franklin Streets (for all I know he’s still there).  Someone had built a new condo project across the street from us at 90 Hudson.  They are having difficulty selling the units.  We did some market research and decided to convert the building from one that had housed printers to a very nice, Class B office building.  There’s a lot more to this story but out of respect for your time I’ll get to the point.  Mort, Marshall and Fred wanted to ‘give back’ something to the community.  The NAACP Legal Defense & Education Fund was looking to expand.  At that time they were headed by their long-time leader, Jack Greenberg.  After a series of meetings (in which there were always about 12 people, including a number of attorneys (which included Cliff Case, whose dad was a long-time Senator from NJ) and usually just Mort and me from our side) a deal was struck:  30,000 sf, three full-floors at a very, very fair rent.  The deal also included a condo-purchase option agreement at a very, very fair price.  We agreed that we would offer basically the same deal to any Legal Defense and Education Fund.  So, we ended up with what we called, “The Legal Defense Fund Building” and while there were other type tenants, none complained about the branding and it was one of the most interesting redevelopments I’ve ever been involved with as when we started I didn’t even know what a Legal Defense & Education Fund was!

It wasn’t that many years ago (when you measure in dog or Internet years) that TV in the U.S. basically shut down at midnight or maybe a tad later.  It was after the 11pm news and also after the early Tonight Show first with hosts Jack Paar and later with Steve Allen and finally with Johnny Carson (I don't really care for Leno).  After that, the screen showed what was called a “Test Pattern” and from what I recall there was this medium pitched noise that went all night until either some early morning prayer show or The Today Show which when I was growing up was hosted by Dave Garroway with sidekick Jack Lescoulie and J.Fred Muggs (a chimpanzee).  Anyway, what got me thinking about this is how 24/7 our world has become.  You can do a lot of customer service type things on the phone or on line at any time of the day or night.  Once upon a time, in the 1980’s I came up with an idea, when I was a consultant to the owner of a very distressed (vacant) strip center to lease the center to businesses that were all open 24-hours.  He didn’t go for it and in hindsight I think I was way ahead of the curve but, hey, when you talk about themed solutions to distressed properties, you have to think outside the ‘big box.’ Actually, my idea exists in the form of 24-hour 'groceries' and 'drug stores' that have lots of other departments and stuff. Anyway.....

I received an email this week from the retired legendary real estate investment manager, Ted Leary, who has found a new life as a consultant to some of the country’s biggest pension funds and keynote speaker at various global real estate conference.  Ted, from time to time, publishes a commentary and the one he send out this week, in my humble opinion, is a wonderful assessment and observation on the institutional real estate world.  It’s Ted’s open and honest thoughts  of where we’re at and what we need to do to get where we’re going.  It’s too long to post here but it’s not too long to read.  I’ll be happy to forward it to you; just send me an email (

Recently I learned about a very interesting company called “Get What You Set.”  With the beginning of a new year staring us in the face I thought that this discovery was a serendipitous one.  In their own words, “Get What You Set is a revolutionary system for job seekers and career changers that reveals the secrets of a seasoned Fortune 100 recruiter who has represented thousands of candidates.”  But in roaming around their website there’s a lot more than just this.  Check it out.

Restaurant (just observations and opinions): Tyler Florence, Napa, California. Apparently he's a celebrity chef but I had not heard of him. He opened his place at the Napa riverfront a few weeks ago (near Morimoto's new place.) Seems like Napa is becoming one giant food court! Anyway, I went there with a chef friend of mine. We sat at the bar. It was busy. Soon after we sat down, Robert Currythe executive chef from Auberge du Soleil sat down next to us. We were told that sitting at that table 'over there' was the lead food critic for the San Francisco Chronicle, Michael Bauer, who I've learned really likes Chef Florence. Anyway, the food was definitely good but really heavy. I don't see myself going there much because, well, I try to avoid heavy foods. But, interestingly, I learned that Morimoto has been averaging 700 covers on Saturday nights since he opened. This is huge, as is the restaurant and the staff. It shows the power of the celebrity chef. I just wonder how these guys will do when their free-rent period expires!

Btw. Here are some restaurants in Napa (not Napa Valley but Napa proper):
1. Angele
2. Pizza Azzurro
3. Oenotri
4. Celadon
5. Ubuntu
6. Boon Fly Cafe
7. Cole's Chop House
8. Zuzu
9. Napa General Store
10. Norman Rose
11. Small World

On the road...
Jan. 12-14:  Laguna Beach, CA to attend IMN’s Eighth Annual Winter Forum on Real Estate Opportunity & Private Fund Investing (Will you be there?).
Jan. 22-23:  Ormond Beach, FL for the unveiling of my dad's headstone.
Jan. 24-31:  New York (including seeing Umphrey’s McGee in concert at the Best Buys (formerly Nokia) Theatre on Jan. 28.
Jan. 26:  A quick trip to Chicago
Feb. 1-3:  Dana Point, CA to attend IREI’s Fifth Annual VIP Conference.
Feb. 7-10:  New York
Feb. 11:  Chapel Hill, NC to be a judge in the University of North Carolina/Keenan-Flagler Real Estate Challenge
Feb. 14-18:  West coast
Mar. 16-17:  Washington, DC for the PREA Spring Conference
Apr. 13-15:  Venice to attend INREV's Annual General Meeting
May 12-14:  North Palm Beach, FL for the annual meeting of the Homer Hoyt Fellows

These are my views and not that of my employer.

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