Madison Square Building revived

Real Estate Weekly, August 10, 1994

As the real estate market evolves, owners continue to weigh the value of significant investments in renovation. Schroder Real Estate Associates, advisor to the corporate pension fund investment group, HAT Real Estate II L.P., has reason to confirm the strategy and program they instituted. In June of 1990, they identified and then acquired 15 East 26th Street: a structurally sound, well-located, yet under-managed, 330,000-square-foot secondary office building in an attractive location opposite Madison Square Park, with a lot of vacant space.

The building was targeted as a candidate for actuating Schroder's investment strategy: purchase of a property with intrinsic quality that had the potential for adding value through professional asset management; exercising the necessary functions of renovation, restoration, rehabilitation, reconstruction, repositioning and marketing. The program resulted in development of The Madison Square Building, a successful, full service, primary office building that has attracted a steady stream of first class tenants.

Success of the venture can be measured both symbolically and actually: Hanging in the building office is the Modernization/Restoration Award given by the Building Owners and Managers Association (BOMA) for the imaginative and successful modernization of an existing property (through restoration, renovation, expansion and/or conversion).

Most important to investors however is the leasing record: Since the renovation program began, 35 transactions (new leases and renewals) involving in excess of 310,000 square feet have been signed.

Most recently, Chase Manhattan Bank has solidified its private banking operational facilities with a new lease arrangement entailing expansion to two full floors with options for additional space, totalling 53,010 square feet. Chase has been located in the building since 1982. It will relocate its operations to two new floors that will be modernized and finished to their requirements before they move from their present space.

Covington Fabrics has leased the two top floors and retail and storage space, for a total of over 27,000 square feet; and will relocate from the Fifth Avenue showroom and headquarters it occupied for 40 years.

Other tenants include Chermayeff & Geismar, graphic design; Goodkind & O'Dea, civil engineering; Harcourt Brace, publishing; Jewish Community Centers, social services, New York County Medical Society; and Structure Tone, construction, as well as showrooms and offices for the giftware and related industries.

For the renovation, Schroder assembled a team of experts, guided by Charles McIntyre, senior vice president; including the architectural firms of Daniel Barteluce and Dan Weisberg and Structure Tone for construction.

The facade needed a major facelift, so its interesting details, including gargoyles and garlands, were restored, cleaned and incorporated into the building's steamcleaned and painted facade, as well as its identity and marketing programs. The upper floors have been illuminated with floodlights. The oversized windows facing the park were thoroughly overhauled, and many of the east-west wire-glass windows were replaced with clear glazed insulating windows. Previously dark, drafty and noisy areas are brighter, and well-insulated for temperature and sound.

Street level improvements include new decorative canopies to mark the lobby and adjacent showroom entrances. The ground floor was re-configured, a completely new lobby created and opened to natural light and a view of the park by a new glass entrance placed in the center. The new walls are of rare wood veneers, with limestone and granite on the floor, and high vaulted ceilings have indirect lighting. A concierge desk has been installed containing all security, elevator monitoring, and communication systems and is manned 24 hours-a-day, seven-days-a-week. A card key access system has also been installed. Rotary finished bronze elevator doors compliment the new elevator cabs as well as the new computerized, high-speed elevator systems.

Multi-tenanted floor common areas have been dramatically improved and include new carpeting, walls, and bathrooms. All aspects of Federal and City codes have been addressed in renovating the building to accommodate the handicapped.

Joseph Costabile, executive director; and Howard Simson, director, of Cushman & Wakefield, Inc., represent the Madison Square Building as exclusive leasing agents.