NEW YORK CITY-Serving up a reminder that new office inventory will soon come on the market, Hines officials on Tuesday presented the story of the company's 7 Bryant Park to members of the local NAIOP chapter during a meeting in Midtown. As previously reported, the property is spec development and slated to open next year.
Calling the building “one of the projects that gets people inspired," Tommy Craig, senior managing director and head of Hines' New York office noted that the structure includes 65,000 square feet of unutilized FAR from the adjacent building. That was purchased by Pacolet Milliken, a limited partner on the deal and a ground lessor. Hines' equity partner on the 474,000-square-foot project are institutional investors advised by J.P. Morgan Asset Management.
Although plans for the building started at the height of the recession, Craig noted, the project has featured a sense of urgency since the beginning. “When plans started on April 1, 2009, there wasn't a sign of growth,” he said, “but our client said that when the market turned, they wanted to be ready.”
“The Milliken family chose to sign a ground lease,” he continued, “and the payment structure doesn't involve an appraisal of the land value at any point,” Craig said. The financing is all-equity. Hines was able to get the project going with spec financing, he noted. “We had four sources, which validated the decision to go forward on a spec basis.”
The company also was ready to do so because of timing and, of course, location, added Dan Doty, managing director. “Given where we were in the construction cycle, it was an ideal time to lock in construction costs,” he said. The firm wanted a Guaranteed Maximum Price contract, Doty noted.
“Plus with the core nature of the asset,” he added, “being right by the park and with great views, we thought we could get premium rents.” Asking rent for the building—which does not yet have any tenant—is over $100 a foot, and $200 for the penthouse space.
The building's layout would enable Hines to offer high-density floors that would allow for 100 rentable square feet per employee, Craig noted. Also of note, 7 Bryant Park features a column-free interior with the opportunity for raised floors, enabling the building to accommodate changes in floor layouts and tenant workforces, he said.
A total of about 18,000 square feet is also available for retail on the ground floor and lower level, noted director Sarah Hawkins. Hines envisions having one large tenant—most likely a restaurant—for the bulk of the space, with a second area going possibly to a small café or even an office tenant with a private entrance.
While Craig admitted that “we feel pressure every day to lease those 28 floors,” he seems confident that the building's virtues speak for themselves. “We're representing tenants who need 150,000 to 200,000 square feet, which is an underserved market.” Such companies might get swallowed up by a larger building but they could shine at 7 Bryant Park, he noted, even having access to microtile walls at the building's entrance that could be used for branding.
He added, “long-term, investors and users will pay for a more usable workplace. A successful tenant at 7 Bryant Park will be a first-generation tenant who wants to stay somewhere long-term and who wants to be in a location where employees will like to work, not just today but for the next 20 to 40 years.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
