Commercial Real Estate & Advisory
Commercial Real Estate & Advisory
When the Food Network inked a deal to move its entire operation from midtown to west Chelsea last spring, it marked the end of a two-year search by the popular cable concern.It also marked another in a string of important leases hat are turning a patch of Chelsea into a thriving mini office district at a time when much of the city’s commercial real estate business is still in a slump.The activity is dominated by two of the largest and snazziest commercial buildings in the area, 111 Eighth Ave. and Chelsea Market at 75 Ninth Ave., the Food Network’s new home. The two properties, with a total of nearly 4 million square feet of space, have bragging rights as being close to full in a tough market.
“It’s phenomenal, especially considering their size,”says Christopher Owles, managing partner at Sinvin Realty Corp., a specialist in downtown leasing. “Even in small buildings, there is a certain vacancy rate.”The ingredients for success in the neighborhood are as simple as location and as complex as cachet, brokers and tenants say. Both block-long buildings, directly across from each other between West 15th and 16th streets, have been treated in the past several years to major makeovers with distinct personalities that give them a marketing edge.
Chelsea Market is positioned as a food mart and media building with action virtually around the clock. At 111 Eighth Ave., the vibe is more corporate. The building houses two bank branches and functions as a more traditional office property than Chelsea Market, where the smell of fresh-baked brownies wafts through the halls.Both Chelsea Market and 111 Eighth Ave. are currently commanding prices of about $30 per square foot, down from boom-time highs of the upper $40’s per square foot, but about the same level as midtown south average of $29. The deal-making in these two buildings is definitely a bright spot in an otherwise cruel market.
Just a few blocks away, leasing is far less robust. The Starrett-Lehigh Building, at 601 W. 26th St., once one of the hottest buildings in the area, has gone cold.Last month, Starrett-Lehigh had 560,000 of its 2.2 million square feet available for leasing, according to CoStar Group Inc. data. At Chelsea Market, a mere 18,000 square feet of office space is available at the 1.1 million-square-foot complex, according to David Falk, principal at Newmark & Co. Real Estate Inc. the property’s leasing agent.
Largest tenants and their square footage
CHELSEA MARKET (1.1MILLION SQ. FT.)
Food Network 106,000
Oxygen Media Inc. 85,105
Major League Baseball 71,528
111 EIGHTH AVE. (2.8 MILLION SQ. FT.)
Wachovia Securities 255,0000
Sprint Communications 246,000
Deutsch Inc. 138,000
Many attribute the sagging fortunes of Starrett-Lehigh to its location on 12th Avenue, a long walk from any subway stop. When companies were shut out of midtown at the height f the real estate boom in the late 1990’s, they were willing to make employees walk. Now employers have many more convenient options to choose from around the city.Thanks in part to Chelsea Market itself, the neighborhood has become a draw for businesses looking for large, unique spaces. The property, a former Nabisco cookie factory that was turned into retail spaces and offices by developer Irwin Cohen, opened in 1997. It features wholesale and retail food concerns on the first floor, and an upstairs tenant roster that includes New York 1 News and Oxygen Media Inc.
“You don’t have to be a rocket scientist to see that the marriage is a good one,”says Samuel Clark III, executive director of Cushman & Wakefield Inc., the Food Network’s broker. “Before people even get to the Food Network’s offices, they’ll be thinking about food.”
At 11 Eighth Ave., location was key for executives at DoubleClick, a marketing services company that recently signed a 15-year lease for 76,000 square feet of space. “The fact that the subways came right to the building was a critical part of our decision,”says Bruce Dalziel, DoubleClick’s chief financial officer.The Chelsea activity is sparking new commercial development nearby. Mr. Cohen’s organization is from Chelsea Market. Another revamped building, 415 W. 13th St., has attracted Estee Lauder, until now a decidedly uptown name, which has inked a 15-year lease for its Bumble and bumble beauty salon division.