The IDCNY turnaround: a classic case history

Real Estate Weekly, June 26, 1996 by Steven H. Klein, David A. Parisier

Developing a New Target Market with the existing tenancy stabilized, a marketing program for the newly created large block of available space was developed. It had become obvious early on that the IDCNY's future depended on moving away from the design industry. Therefore, S.L. Green's next task was to develop a new target market for the property and the reintroduce IDCNY to both the tenant and brokerage communities. The leasing team decided that large floor plates, 120,000 square feet in Center I and 53,000 square feet in Center 11, high level of amenities, ample and inexpensive power supply, lower overall cost structure and availability of substantial tax savings, combined with its institutional ownership should be aggressively marketed to attract large corporate and government tenants. The target market focused on large users that did not require a Manhattan presence, but valued IDCNY's close proximity to both Manhattan and Long Island and first class space and amenities. The property was therefore positioned as The Business Center at IDCNY.

Focused pricing

The S.L. Green leasing team developed a pricing and concessions package for IDCNY that would directly compete with comparable alternative properties. A rental price of $16 to $18 per square foot was adopted and included cleaning and a $35 per square foot work letter to compete with alternative properties in downtown Manhattan and Brooklyn. An essential part of the marketing program was creating a corporate identity for IDCNY, which focused on the high quality of space, amenities, convenient location and strong ownership. The available space was marketed via a creative advertising and promotional program aimed at both the tenant and brokerage communities. This program combined an aggressive canvassing program, which included the use of a governmental lobbyist with several marketing tools including:

* The creation of a high-quality building identity brochure.

* A creative and concentrated advertising campaign that ran in numerous industry publications.

* On-site video presentations, featuring the available space, amenities and available cost savings.

* Specialized promotional lunch events at the property for members of the brokerage community.

Results

S.L. Green's two-year marketing campaign attracted a number of corporate and government users, leading to leases with Dillon Read and Allen & Company and finally resulting in a 201,364 square foot lease transaction in January 1996 with the Department of Design and Construction (DDC), a newly formed superagency of the City of New York in IDCNY Center 1. The 17.5-year, $40 million lease features an option for an additional 112,000 square feet and none of the rights of termination found in most leases with the City of New York. In addition to the DDC lease, the Department of Transportation also leased 49,669 square feet in Center I for its training and enforcement divisions. The transactions offered an excellent synergistic opportunity for the City of New York, which already occupied 169,036 square feet of space for the School Construction Agency, to centralize its construction operations in a modem and conveniently located facility. Negotiations for these complicated deals spanned more than nine months and involved numerous options and detailed work letters.