SL Green Realty Corp. may be New York City’s largest office landlord, but the REIT hardly has tunnel vision when it comes to property types. In two separate joint ventures, SL Green has completed the acquisition of eight retail and residential assets in Manhattan’s Midtown and Upper East Side submarkets.  The REIT had announced plans for the $416 million purchase of the properties in October of last year.

In a partnership with Jeff Sutton, SL Green snapped up the 65,000-square-foot retail building at 724 Fifth Ave., relying on a $120 million, five-year mortgage loan to make the purchase. The property counts Prada as its lead tenant; the Italian luxury goods retailer leases 20,700 square feet of retail space on various levels, in addition to a boutique office space.

SL Green also just claimed 402 residential units and even more retail space for $193 million through its joint-venture purchase with Stonehenge Partners. The group of assets includes the 260-unit apartment building at 400 E. 57th St., which also features 16,000 square feet of ground-level retail, and 400 E. 58th St., a 125-unit residential tower with roughly 3,300 square feet of ground-level retail space. SL Green secured seven-year mortgage financings totaling $100 million to facilitate the acquisition.

Interests in the four-story retail building at 752 Madison Avenue and 19 & 21 E. 65th St., two mixed-use properties encompassing 17 multi-family units and 9,000 square feet of retail space, were also part of the SL Green-Stonehenge joint venture deal. And two commercial properties, the 6,000-square-foot mixed-use building at 762 Madison Ave. and the five-story commercial building at 44 W. 55th St., round out the group.

SL Green’s penchant for joint venture pursuits — both acquisitions and dispositions — continues, as indicated during the REIT’s fourth-quarter earnings conference call. “On both sides of the table, we were active, we continue to be so in 2012, notably 10 East 53rd Street, which was not discussed in December, is our latest acquisition,” Marc Holliday, CEO of SL Green, said. “It fits right in with our core business line of acquiring, repositioning and redeveloping prime New York midtown Manhattan assets in prime location. And in that case, we subsequently brought in a foreign and institutional equity joint venture partner to both leverage our equity, enhance our returns and increase our opportunity set.”

Artist's rendering of ground-level retail at 530 Fifth Ave. after renovations.

While there have been some predictions for the cooling of the New York City office market, and even some talk of Downtown becoming the new hotspot of development, don’t ever count out Midtown. Near the close of yesterday’s markets, Jamestown Properties and Rockwood Capital announced the $390 million acquisition of 530 Fifth Ave. – also known as the Bank of New York Building – which is soon to undergo a $20 million renovation to bring the property to Class A standards. The purchase’s partnership also included Crown Acquisition and Murray Hill Properties.

“530 Fifth Ave. is considered an iconic building on Fifth Avenue and we look forward to restoring the property to prominence,” Michael Phillips, COO of Jamestown, said. “In addition, Fifth Avenue south of 48th Street has become a hot-bed of retail activity in the last year, and following the renovations at 530 Fifth Avenue, the building will be a stand-out option for retailers.”

A report in the third quarter of 2011 by Jones Lang LaSalle Inc. found that Fifth Avenue was the second-most-expensive street, on average, for domestic asking office rents at $97 per square foot. Similarly, Cushman & Wakefield Inc.’s data showed that the Midtown market, which ended 2010 with a 10.6 percent vacancy rate, saw that number fall to 9.6 percent by the end of 2011. Class A asking rents in the same time period increased from $67.27 to $71.22 per square foot.

The building’s office-leasing efforts will be led by Newmark Knight Frank’s president, David Falk. “When the building is re-introduced with the proposed renovations underway, I believe there will be tremendous interest from tenants that want the Grand Central location but are looking for a building that matches a company’s high-profile brand and image.”

Retail development and leasing will be handled by Jamestown and Crown, which will likely prove to be a fruitful initiative. According to Cushman, Upper Fifth Avenue saw a fourth-quarter 2011 average ground-floor asking rent of $2,338 per square foot, a 12 percent increase from the previous quarter. Lower Fifth Avenue, where the acquisition is located, increased 50 percent in the same timeframe to a record $865 per square foot.

Eight years after selling The Plaza at Legacy in Plano, Tex., Hines has welcomed the 215,000-square-foot office property back into its portfolio. Hines just acquired the seven-story, suburban Dallas building and an adjacent 12-acre parcel of land in a joint venture with institutional investors advised by J.P. Morgan Asset Management-Global Real Assets.

Not only did Hines previously own The Plaza, but the firm also developed it. In 2001, Hines constructed the Class A office tower that would be known as Computer Associates Plaza, as a build-to-suit for Computer Associates International Inc. at a cost of approximately $42 million. Hines sold the asset for $53 million in 2004 and continued to manage it until 2006. Financial terms of Hines and J.P. Morgan’s recent purchase of the property have not been revealed; however, Hines disclosed that the company relied on the investment-banking team of commercial real estate services firm Jones Lang LaSalle Inc. as exclusive advisor on the arrangement of the joint venture equity and the debt.

Computer Associates continues to call the building at 5465 Legacy Dr. home, but the company recently reconfigured its occupancy with a 10-year lease agreement that leaves it with 77,000 square feet of space and the option to expand into an additional 16,000 square feet.

With The Plaza no longer occupied by a single tenant, Hines has 120,000 square feet of premier space to lease, and financial assistance from U.S. Bank to fund the transformation of the property to suitably accommodate an additional user or users. “Since Hines developed the asset, we know it inside and out, and with this opportunity to reposition it for multi-tenant use, we believe it will be well-received in the market,” Ran Holman, a vice president with Hines, said.

Hines will work with real estate services firm Cassidy Turley to fill up the tenant roster. While the metropolitan Dallas office vacancy rate remains high — 21.8 percent in the fourth quarter according to a JLL study–the timing may be just right for securing a large user. JLL reports that as options for large contiguous blocks of space continue to dwindle in Far North Dallas, Uptown and Preston Center, the three submarkets that have been leading the city’s slow-but-sure recovery, absorption of such spaces will pick up this year in the Central Expressway, Las Colinas and Richardson/Plano submarkets.

Additionally, with the Dallas area’s strong job growth and corporate relocations and expansions, Hines and J.P. Morgan may very well find use for the newly acquired 12-acre parcel, which can accommodate a build-to-suit project as large as 300,000 square feet.

CoSentry, an Omaha-based provider of data center, cloud computing, co-location and managed-Internet services, has purchased a 57,500-square-foot former light industrial building in Lenexa, Kan., for use as a data center, the company announced late last week. Construction on the $31.6 million rehab project, at 14500 W. 105th St. in Lenexa, is expected to begin next month.

After a two-year evaluation process, CoSentry chose the Kansas City region out of 21 markets, based in part on competitive energy prices, said Doug West, vice president and general manager for CoSentry’s south region. Colliers International led the real estate search.

A CoSentry spokesperson told Commercial Property Executive that the new facility will likely be a Tier 3 data center. Such centers typically have redundant power for all IT equipment and guarantee more than 99.98 percent availability.

The Kansas City Area Development Council, Kansas Department of Commerce, and Lenexa Chamber and Economic Development Council worked together to bring CoSentry to the KC region. The data center reportedly will create more than 60 jobs.

The two-state Kansas City region reportedly ranks among the nation’s top three for IT workforce availability and is a focal point for both long-haul fiber and transcontinental fiber networks.

Earlier this month, CPE reported on Digital Realty Trust’s purchase of major data centers in San Francisco and Atlanta, for $85 million and $63 million, respectively.

And in late December, we reported that Hines Global REIT had acquired, for $160 million, Fisher Plaza, a two-building complex in Seattle that includes a multi-tenant data center in addition to office, retail, broadcast and telecommunications space. As of the purchase, Hines already owned the 661,500-square-foot One Wilshire Building in Los Angeles, which houses more than 300 telecommunications and data carriers.

The past year saw a surge of interest in data centers. “There is an insatiable amount of demand happening around the globe,” Bo Bond, co-lead of Jones Lang LaSalle’s data-center solutions team, told CPE last month. “As speculative development commences, we will begin to see a new crop of winners and losers in the data-center arena.”

Capitalizing on the increased need for both office and retail space, Hines has partnered with DLF Ltd. to begin construction on One Horizon Center, which will be located southwest of New Delhi in Gurgaon. The project will include a 25-story office tower with 800,000 square feet of space, as well as 65,000 square feet of retail.

“Along with DLF, we are proud to celebrate the start of construction of One Horizon Center,” Hines CEO Jeffrey Hines said. “India is an important market for us with huge potential, as we see growing demand among discerning clients. We have invested significant time to study and understand the needs of the market, and we are committed to extending our international best practices to this development.”

According to a report by Cushman & Wakefield Inc., demand for quality real estate in India is going to see strong upswings. “Retailer expansion in India is a result of a combination of strong economic growth driven primarily by internal consumption backed by quality retail supply being provided in major cities across India,” Jaideep Wahi, director of retail services for India, said. “Growth in the luxury sector has been a rising trend. 2012 will provide a conducive environment for further retail expansion in India, with continued economic growth and new shopping centre supply in the top ten cities.”

Additionally, a report by Jones Lang LaSalle Inc. pegs India’s GDP growth at 7.7 percent for 2012, “as generally vibrant consumer spending should help to offset slowing exports and investment spending.”

One Horizon Center marks Hines’ first project in India and is scheduled for completion in 2013. The structure is being built to LEED sustainability criteria that includes a dual-paned glass façade.

Three real estate industry veterans have joined forces on the launching of a new services firm, Serten Advisors. Boyd Partners founder Kirk Boyd partnered with former Studley vice presidents Steven Hubberman and Paul Schweitzer to establish the new company, which provides commercial real estate services exclusively to tenants in metropolitan Washington, D.C.

The firm’s moniker does not derive from the name of the three managing principals, nor is it an homage to any celebrated industry icon. “It stands for ’servicing tenants,” Boyd told Commercial Property Executive. “It’s really all about what we do.”

And what they do is provide office tenants — even office tenants with additional needs such industrial space accommodations — with services honed through the decades of tenant advisory expertise that Boyd, Hubberman and Schweitzer bring to the table.

Boyd had served as an officer and top producer at Cushman & Wakefield Inc. and CBRE Group Inc., and he has spent the last 14 years “doing nothing but tenant representation.” Hubberman had been with Studley since 1989, where he provided tenants with an array of services. Schweitzer had spent nearly 30 years at Studley, during which time he was involved with veritably every facet of brokering, from leasing to investment sales. “We like each other, we respect each other and we’ve competed against each other for the last 20 years, and in the last 10 years we’ve been talking about working together,” Boyd said.

But the firm provides much more than the synergies of longtime friends and colleagues. “What we are offering is an experienced senior level person on every client account,” he notes. “It really gets down to the experience and level of service that is focused on the tenant part of the business, and that really differentiates us. I think people are very interested in seeing something fresh with this level of experience and type of people. I don’t think there’s anyone else in the D.C., market that has more senior-level, experienced, tenant representation folks in their company.”

The three managing principals also come armed with a ready-made client base and long-established relationships — and good timing. “We thought there was an opportunity in the marketplace. A lot of people look at the weak economy and say, ‘It’s a tough environment out there,’ but we’re in one of the best markets in the world and there’s a lot of consolidation and other activities occurring.”

So far, Serten has been well received. The firm has garnered a great deal of positive feedback from its clients, the brokerage community and the business community in general. “A lot of people are reaching out to us already, we have a lot of people that are very interested in what we’re doing.”

In a $66 million deal that completes the second phase of the Scottsdale Promenade sale, Lucescu Realty has sold the Promenade Corporate Center to Excel Trust, a publicly traded REIT. In July of last year, the San Diego-based Excel Trust purchased The Promenade, a 730,000 square-foot shopping center in Scottsdale, Ariz., in a $110 million transaction.

Scottsdale Promenade, a 1 million-square-foot, mixed-use project, is one of the largest commercial properties in the Phoenix metropolitan area, located on 84 acres of land. The office component of the space consists of two four-story Class A buildings that total 256,176 square feet.

In July, Mark Lucescu, president of Lucescu Realty, told Commercial Property Executive that the Promenade is “a flagship property” that is outperforming most other mixed-use centers in the area. “If there are a handful of properties like this to invest in Phoenix, this is the one you’d want to buy,” he said. At the time of the transaction, “the property was 100 percent leased [and] had plenty of equity,” he noted.

According to NAI Horizon, the Phoenix office market, though in the doldrums through most of 2011, is starting to see some upward moves. A three-year run of continued unemployment, coupled with a flight to quality – which left many properties empty – left the market battered. But the fourth quarter of 2011 saw the office-vacancy rate drop 40 basis points from the previous quarter, finally resting at 20.7 percent. Rental rates, at year’s end, sat at $20.29 per square foot on average.

The center’s retail component is anchored by Lowe’s, PetSmart and Trader Joe’s.

Image courtesy Wikipedia user Beyond My Ken

After acquiring New York City’s Clock Tower building at 5 Madison Ave. in 2007 for $200 million, Africa Israel USA has sold the property to Marriott International for $165 million. The building, also known by its full name of The Metropolitan Life Insurance Company Tower, was constructed in 1909 and served as the world headquarters of the insurance firm until 2005.

The hotel chain plans to make the building its first location of the Edition brand, which was described as “a new luxury, lifestyle hotel brand created in partnership between Marriott International and [hotelier and real estate developer] Ian Schrager. According to Kew Management, fashion designer Tommy Hilfiger signed a $170 million contract in May 2011 to transform the property into a hotel, but the deal fell through in September.

Vacant since 2007, the Clock Tower property was added to the National Register of Historic Places in 1972, was designated a National Historic Landmark in 1978 and became a New York City landmark in 1989.

“We are delighted to have achieved such a strong price for this asset as a hotel property,” Laurie Golub, general counsel & managing director of business affairs of AFI, said. “It speaks to the unique nature of the building and the exciting location, which is underserved by the hospitality industry.”

The hospitality sector is likely trending upward, according to a year-end report by PKF Consulting. “Despite inconsistent economic news,” the report noted, “increases in lodging demand and property-level net operating income have most industry participants feeling optimistic that hotel property values are heading upward.”

A spate of media reports over the past two or three days have speculated about whether Silverstein Properties Inc. will build the 3 World Trade Center tower to its planned 80-story height, or will cap it at seven, and what this indicates, or doesn’t, about the Class A office market in Downtown Manhattan.

Here’s the deal: The original master development plan agreed to in August 2010 specifically stated that the construction of the 3 WTC tower, as opposed to its retail-oriented podium, would be conditioned on the extent of office pre-leasing. In a statement released Tuesday, presumably to clarify the situation, Silverstein Properties president & CEO Larry Silverstein said, “We are 100 percent committed and determined to build 3 World Trade Center to the top as quickly as possible. We agreed to a plan in 2010 that requires us to pre-lease 10 floors of office space before moving forward with the full tower.”

”We are currently speaking with a number of potential tenants and remain fully optimistic that we will sign a lease in time to complete the tower as scheduled in 2015. That agreement, which anticipated the completion of the podium in 2013, in no way prevents us from moving full steam ahead as soon as we secure a tenant.”

In plain English, the development agreement provided substantial flexibility down the road, so that the pace of building could be adjusted to demand for space. While Silverstein, obviously, would like to push the tower to its planned height, the leasing environment may prove to be the roadblock that impedes his progress.

Amid the hubbub, progress continues on several fronts at the World Trade Center site. As of this week, the steel skeleton of 1 WTC has reached 90 floors (of 104) and is now the tallest building in Lower Manhattan. The tower will top off in late spring, according to a Port Authority of New York & New Jersey spokesperson, and is slated for completion in 2013. The plan for 2 WTC is to build to street level and erect the tower (100 percent conventionally financed) later. The initial phase will be completed this year.

At 3 WTC, the concrete core is at the fourth floor. Steel will start to arrive in May, and the building will rise at least to the 7th floor initially.

Four WTC is up to the 61st floor and will top out this spring.

Finally, the transportation hub that’s being built around the interim facility that opened in 2003 is heading for completion in 2014.

Following on the heels of reports that call for an uptick in industrial activity for 2012, Trammell Crow Co. and USAA Real Estate have announced the groundbreaking on a 700,000-square-foot Class A spec distribution facility at Mountain Creek Distribution Center in Carlisle, Penn.

“Over the past decade the I-81 Corridor in Pennsylvania firmly established itself as one of the top industrial markets in the country. The market’s comparatively strong performance throughout the economic downturn has further solidified its position as a top tier market” said Andrew Mele, Senior Vice President, Trammell Crow Company. “We believe the project is well positioned to capitalize on continued market demand.”

Mountain Creek Distribution Center is a two building industrial project situated on 113 acres at Exit 44 of Interstate 81 in the renowned Central Pennsylvania industrial market. The project is approved for 1,302,500 square feet of Class A warehouse/distribution space designed to achieve LEED Core & Shell (CS) certification. The first building, scheduled for completion in the summer of 2012, is designed with cross dock loading, 32′ clear ceiling heights, 60′ x 47′6″ typical bay spacing, ESFR sprinkler systems and ample onsite trailer storage.

The industrial market looks to do well in 2012, thanks in part to a revving manufacturing engine as well as the fact that there are few projects in the construction pipeline. Limited construction – 2011 saw only 20.5 million square feet of completions, down from the five-year average of 88.1 million square feet – is increasing absorption rates in nearly every major market around the country, according to a fourth-quarter 2011 report by services firm Cushman & Wakefield Inc.

Jones Lang LaSalle has been retained to market the project to potential tenants.

USAA manages a multi-billion dollar portfolio including recent acquisitions of $3 billion and development assets of $2 billion. Trammell Crow has developed or acquired over 525 million square feet of buildings with a value exceeding $55 billion. As of June 30, 2011, Trammell Crow had over $3.5 billion of projects in process, $1.4 billion in its pipeline and $1.4 billion in long-term operating assets.