For this property manager, 2000 was a year for growth

Real Estate Weekly, Jan 24, 2001 by Leslie W. Himmel

As we embark upon the beginning of the year 2001 our real estate portfolio has never been stronger. Our company, Himmel + Meringoff Properties, Inc., has been in business for almost 20 years. Over the last few years we have strategically added to our portfolio of more than 2 million SF of commercial office buildings. Our present occupancy rate has been more than 99%, and we have conservatively kept our debt level low. The average rental rates in many of our buildings are significantly below the new market high rental rates, enabling us to have continued rental growth opportunities in our existing portfolio. Most of our real estate holdings are secondary office buildings located in prime areas. Our strategy has been to purchase undervalued, poorly marketed properties in need of physical changes, both cosmetic and mechanical. Then, through extensive renovation, we upgrade the properties and focus on leasing the property with a unique marketing position.

Our most recent example of a "smart" marketing campaign has been our property at 1356 Broadway. After 15 years of pursuing the purchase of this property, we were able to creatively structure this acquisition with four separate transactions by simultaneously purchasing the limited partnership that owned the leasehold interest in the property, the mortgage collateralized by both the fee and leasehold interests, the long-term net lease held by HSBC (originally Greenwich Savings Bank), and the fee position held by a remainder interest subject to a reversionary ground lease.

Built in 1922, 1356 Broadway has a columnar facade, with a magnificent interior banking hall and rotunda. When prospective tenants enter, they exclaim, "this is a remarkable and dramatic space that could not be rebuilt today!" Our creative marketing campaign has taken a two-step approach. The first step involved the identification of "marquis" prospective tenants, and presenting the CEO's of these companies with an elegant black box wrapped in a velvet satchel. The package contained a 360-degree photograph of the interior, which unfolded to reveal the great hall. The second step was to reintroduce the property to the real estate brokerage community and the public by completely cleaning and backlighting the exterior, then "wrapping" the building in a large red ribbon with twenty foot loop bows.

The building with its spectacular bow added to the festivities of the televised Macy's Thanksgiving Day Parade. Many exciting potential tenants are now interested in leasing the building. They include exclusive retailers, designers, restaurateurs, and caterers, as well as Internet and technology titans. The campaign-also included articles in Crains, New York Business, and Real Estate Weekly.

On a professional affiliation note, I continue to be active with the Real Estate Board of New York (REBNY). Currently I co-chair the economic development committee, the purpose of which is to review and recommend economic initiative programs to enhance business growth in New York City. We are working to develop proposals to present to the next mayor. These programs are designed to strengthen business and economic development, with a careful eye to its affects on the real estate industry. Some of the exciting programs we are working on include the expansion of the "Plug'n'Go Program" to promote development in the outer boroughs, the proposal to include REAP benefits to not-for-profit organizations, the broadening of the area to be upzoned in Long Island City, and the planning and infrastructure programs to improve zoning and tax credits.

After actively serving and chairing many REBNY committees over the last decade, I am very proud to have been appointed to the board of governors this year. The Real Estate Board, under the leadership of Steven Spinola and Bernard Mendik, along with the contribution of many talented professionals, continues to be one of the most important and powerful voices for the political and economic governance of New York City.

What is around the corner for us in 2001? We are certainly headed for a slight economic correction. Record high sales prices and rental rates were achieved in 2000. We are cautiously optimistic that while sales prices drop to more realistic levels, and market rents decline to more affordable prices, there will actually be a healthier and more stable economic environment whereby there is a better equilibrium between supply and demand of tenant space. Throughout history, every phase of the economic cycle has presented opportunities -- the year ahead will probably not be an exception and our firm continues to seek new acquisitions, while maximizing the value of our existing tenant base and portfolio.