Barbara L. Nelson
NEW YORK CITY-When Macklowe Properties purchased the GM building for a record-breaking $1.4 billion in 2003 it rocked the real estate industry. But nearly three years later, after renovations and an expanded retail component at its base, the building has retained 78% of its orginal tenant base and escalated in value, said William Macklowe, president of Macklowe Properties.
"People didn't understand why, how and what we could do with the building at that price," said Macklowe at an Associated Builders and Owners of Greater New York Inc. luncheon Thursday. "We had a vision for the building. It's just pure value creation. The building continues to shine."
Macklowe's vision included the expansion of 14,000 sf of retail space, including Apple Computers newest venture in New York City that is to rival anything seen so far from the company's retail division. The store will feature a glass cube entrance at ground level, leading to a 25,000-sf store beneath the plaza.
"We had to drop the floor 18 inches and relocate five tenants for the retail expansion," said Macklowe of the renovation project slated for completion next month. "We worked with Apple for two years on just a handshake. We just signed the contract six months ago."
Most of the office tenants have stayed during the renovations to the 1.67-million-sf building, Macklowe added. "Only 30,000 sf remains, but it's not contiguous." Tenants include Estée Lauder; Bank of America; Weil, Gotshal & Manges and the CBS-TV studios.
It's visionary plan that paid off when the building was revaluated in early 2005 for $1.71 billion. Macklowe converted the $300-million addition in building value into a minority ownership interest which it sold to German closed-end fund Jamestown.
Macklowe, son of Harry Macklowe founder of the company, said office space is at a premium in Midtown, since the condo conversion craze has hit the industry. His opinion is that Eighth and Ninth avenues between 30th and 40th streets is the place to develop new office buildings, not Downtown.
The General Motors Building is located at 767 Fifth Ave., between 58th and 59th streets and rests atop an entire city block directly across the street from the Plaza Hotel. It is also home to an FAO Schwarz toy store, which moved in 14 years ago. The building was formerly owned by the Trump Organization and Conseco.
Macklowe's primary focus at Macklowe Properties is on development, commercial leasing, acquisitions and finance. Recent projects include the redevelopment of 340 Madison Ave., 540 Madison Ave., 400 Madison Ave., 140 W 57th St., 777 Sixth Ave. and the successful placement of over $5.5 billion in institutional financings. Over the course of 35 years, Macklowe Properties has initiated the development and investment of commercial and residential real estate transactions containing over 20 million sf and valued in excess of $6 billion.
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