Trump's 40 Wall Street reaches full capacity

Real Estate Weekly, June 24, 1998 by Lois Weiss

"I've always gone counter to the market and sometimes it pays off," said the decisive developer, who recently agreed to pay $800 million for the privilege of owning and spurring higher rents at the GM Building at the corner of Fifth Avenue and Central Park West and is waiting to hear if his bid has been accepted for the Coliseum redevelopment.

The three major tenants just signed are American Express, which took 166,154 square feet plus options bringing it to 325,000 square feet; CNA Insurance, which took anywhere from 225,000 square feet to CoStar's report of 304,917 square feet; and Country-Wide Insurance, which is leasing about 100,000 square feet.

The remaining floors are also rented to high-profile tenants including Bear Stearns, Compaq, Benjamin Jacobson & Sons, and Healthy Properties.

Also announced last week was a lease by Bigham, Englar Jones and Houston, which took 23,456 square feet in a deal brokered by Colliers ABR.

But it's the inking last week of the American Express lease that means that 40 Wall Street is an unqualified, astounding success, particularly when looking back at the dreadful economic conditions and lack of a Downtown Plan at the time of its purchase for a bit over $1 million.

It's prior owners had purchased the forlorn building at a Citicorp auction for about $9.82 per square foot for the leasehold, or about $7 million. The company was going to make it a viable office building and had ambitious plans for indoor waterfalls and atriums, but after spending around $25 million trying to figure out how to do it, and with construction workers banging on their fenced off doors, decided they better go home.

Trump cut deals to pay-off the old mechanic's liens generated by some of the former ownership, which included Ferdinand and Imelda Marcos, the Resnicks and the Hong Kong investors. He flew to Germany and restructured the ground lease with the landowner, who was convinced Trump could use his magic touch to make the building a first class operation.

Ingeniously, Trump also worked on making the building floors more spacious and brighter by removing four feet of space in the form of insulation around every single structural column.

Real estate brokers report the building could throw off as much as $31 million starting next year, as leases are averaging around $33 a foot.

When Trump first hired Cushman & Wakefield to market the then under renovation building two years ago, it was more than 80 percent vacant, and the last of the tenants were wondering whether or not they should leave their glorious water and city views behind.

Arthur Mirante, president of Cushman & Wakefield, said "In the history of New York real estate, this is one of the best deals ever made. Never have I witnessed such a spectacular turnaround in such a short period of time."

When broker Richard Levy change affiliations to Tishman Real Estate Services, effectively opening a new Tishman office at 40 Wall Street, he and Mike Gochman remained on the account for Trump.

Levy said, "The Trump Building at 40 Wall is one of the most successful developments of our time. Never, to my recollection, has space gone from so unwanted to so totally cherished. Once Mr. Trump bought 40 Wall Street, changed the name to the Trump Building and did the truly spectacular restoration of this great landmark, tenants could not sign fast enough. It is truly unprecedented."

CNA will be moving into the base fifth through 12th floors, while American Express has 17 through 22, plus options for lower floors.

CNA was represented by Charles Borrock of Cushman & Wakefield, while Michael Cohen, president of Williams GVA, repped American Express.

Forty Wall was the tallest building in the world at the time of its construction in 1929, and remains the tallest mid-block building to this day. It is second in height to the nearby World Trade Center towers in the Downtown market. But in 1929, it was quickly supplanted as tallest by the topping of the Chrysler Building and the construction of the Empire State Building.

The Trump Building was landmarked by the city Landmarks Preservation Commission during its renovation.

Trump's dedication and financial commitment to the property, and the passage of the Mayor's Downtown incentive plan, spurred other owners to purchase properties in its shadow, where prices of over $100 to $150 a foot are now routinely generated by bidding wars among investors,

"It has been a great honor to be involved with such a tremendous building," Trump said. "To have saved it, and made it once again a great success, was simultaneously very hard work and lots of fun. Forty Wall Street is again the crown jewel of Lower Manhattan."