ESG hits home run at 1 New York Plaza

Real Estate Weekly, April 20, 1994 by Eric R. Gerard

Mitch Rudin has just hit a home run. With the confirmation last week that Goldman Sachs has leased 420,000 square feet at One New York Plaza, a four-year project to upgrade and release this once ailing property draws near a conclusion.

As senior managing director of the Edward S. Gordon Company and director of ESG's year old Gordon Property Group, Rudin' expertise in project management, property repositioning and negotiation of major lease transactions is paying big dividends for both clients and the 22-year old full-service commercial real estate company.

In 1989, Rudin first became involved with One New York Plaza, joining a team headed by ESG Vice Chairman Martin Turchin. At the time, the team was advising the owner, Chase Manhattan Bank, on turning around its newly-acquired 2.3 million square foot property, Downtown's Financial District.

The building had been plagued by ongoing asbestos problems and the loss of tenants. Chase and Salomon Inc. both planned to vacate the property, creating a huge block of available space.

"It took a lot of foresight and nerve for Chase to invest the capital that was needed to transform the building," Rudin recalls. "The market was at its depth , and it was not easy to see where the new tenants were going to come from."

It was a mammoth undertaking. Chase and ESG basically took an older Class B building and transformed it into a gem, Class A property. ESG designed a plan to drive operating costs down, while directing the total renovation of the facade, lobby, plaza, windows, elevators, common areas, and HVAC systems, and overseeing the asbestos removal.

The investment paid off for Chase. In August of 1992, Prudential Securities leased 16 floors of the building for a total of one million square feet. Earlier this month, Goldman Sachs committed to 420,000 square feet in a deal arranged by Rudin, Turchin and Managing Director Robert Constable, nearly completing metamorphosis at One New York Plaza. With other pending leases, the property will soon be 95 percent occupied.

For Mitch Rudin, the One New York Plaza project has been the most rewarding of his short tenure at ESG. "I have worked on several property re-positioning projects, but this was by far the most gratifying," Rudin says. "The team that we assembled was first rate. And it's just very satisfying to work with talented people like Marty Turchin and our clients at Chase. It made my job easier."

Rudin's history includes a partnership at Tishman Speyer Properties, where he was responsible for the leasing of two million square feet in its metropolitan New York portfolio. Before that, he honed his skills as a real estate attorney with an emphasis on commercial real estate at the firm of Davis & Gilbert.

"All the associates rotated through the different departments at Davis & Gilbert," Rudin recalls. "When I spent time in the real estate area, I found something that challenged me and that I really enjoyed. "

While hammering out lease negotiations for a client of Davis & Gilbert, Rudin caught the eye of principals at Tishman Speyer, who were so impressed with the young attorney that they offered him a position shortly thereafter. He joined the firm in 1985.

Next, he moved on to ESG, where he amassed an impressive list of high profile success stories. ESG appointed him director of the newly formed Gordon Property Group (GPG) in 1992. The new group deals primarily with the emerging needs of institutional owners. By 1994, the portfolio of properties under the direction of GPG has grown to 8.5 million square feet of Northeast office space owned by such major clients as Chase Manhattan Bank, Equitable, Prudential, Teachers Insurance & Annuity Association and Travelers Insurance.

The formation of GPG came as a realization of a trend towards serving the increasingly complex marketing and asset management needs of corporate, institutional and entrepreneurial property owners. As the owner's agent, GPG studies the property - assessing, its current competition, market position, expense and income performance - then creates a comprehensive strategy to maximize its value within the owner's budgetary parameters.

In more comprehensive assignments, GPG draws upon the expertise of other ESG divisions, most commonly leasing, consulting and property management. A GPP asset manager is assigned to each property and oversees service delivery to maximize performance.

In practice , clients who come to GPG are advised of the full range of services that the company has to offer, including asset, construction and property management and leasing. GPG can establish a comprehensive program or the client can select from this menu of services.

The initial GPG approach would be to analyze the current position of the property, explore capital alternatives and anticipated returns on investment, design an operating expense savings program and probe the more subjective area of possible revenue enhancements. They can also offer information on the latest real estate tax developments.