Fashion Center dresses for office use

Real Estate Weekly, March 24, 1999 by Lois Weiss

Many of these are firms that, by their very service nature, don't usually have client visitors, but instead venture out to meet the clients at their own Class A offices.

The edges of the Garment Center have already attracted building architects such as Der Scutt, who long has had a bright loft space on West 28th Street; and Costas Kondylis, who will move to a space on 27th Street this summer.

The former McGraw Hill Building at 475 Tenth Avenue at 36th Street, owned by the Adler Group, is loaded with well-known architects such as Richard Meier, Gwathamy Siegel, and Buttrick White & Burgis. Last summer, Ian Schrager Hotels moved into one of the 17,500 square-foot floors, where the asking rent on a remaining floor is about $18 a foot.

"It's one of the few places you can get upper teens per square foot, and there are some tenants willing to go to untested areas in order to keep their rents at a reasonable price," said Fagin. Earlier 90's trend spots like Hudson Square, he noted, have rents now approaching $35 a foot.

Typical of the new tenants is Quinn & Co., a public relations firm servicing hotel and real estate clients that just moved to a building on West 35th Street from the Flatiron District. Its long-term lease became due and the rent would have to jumped from $11 to $22, said Vice President David Platter.

By moving to the mid-block loft building, they were able split the difference and rent approximately 2,200 square feet for about $17 a foot. The 100,000 square-foot building is one of several similar properties on that block with availabilities and rents ranging from $10.50 to $20 a foot, and is currently listed in CoStar as being close to 100 percent full.

"We feel like pioneers," said Platter. "We moved into the Flatiron District when it was a mess, and now its desirable, and now this is the up and coming area. You get cheap food and you're close to Macy's, and we got to build out a beautiful new space. And now we have room for luxuries like our 'Dream Room.' It's a place for dreaming and screaming, and we use it to brainstorm and strategize, or just to brew a cup of tea. We couldn't have afforded that if we stayed in the other neighborhood."

If there were space at the 240,000 square-foot 1001 Sixth Avenue at 37th Street, owned by a Helmsley-Spear group led by Alvin Schwartz, a tenant might only pay $18-$20 rents, said Mann. "It's perfect for an ad agency," he added, "and its close to Penn Station, Grand Central or the Bus Terminal."

When tenants at 310 Madison Avenue at the corner of 42nd Street got their dispossess notices from Harry Macklowe, they were taken aback. Rather than finding rents similar to what they were paying in the high-teens and low $20's, they found nearby spaces in the Grand Central Station area bottoming at $30 a foot.

"They got sticker shock," said Brimlow, a broker who has worked and is still working to relocate a number of tenants.

It's that city center sticker shock, however, that is driving new investment and new tenants to Fashion Land.