The Bush Push: Tribeca Associates Founder Elliott Ingerman on Bush Tower
Last week, Tribeca Associates, a New York-based real estate firm, announced that it had agreed to acquire the long-term leasehold—for an undisclosed sum—on Bush Tower, a 30-story skyscraper built in 1918 for the Bush Terminal Company. To be henceforth known as 132 West 42nd Street at Bryant Park, the property will undergo an extensive renovation in the next 12 to 18 months, paving the way for the trophy asset to join the ranks of the neighborhood’s more recognizable glass towers. The project is one of a number that Tribeca Associates has in the pipeline, not the least of which is the Baccarat Hotel and Residences at 20 West 53rd Street, where sales are underway. Elliott Ingerman, founder and managing partner at Tribeca Associates, spoke with The Commercial Observer at the firm’s Tribeca office about current projects and his outlook for 2014.
You have acquired the long-term leasehold on Bush Tower. Can you give some background on how you identified that opportunity?
We looked at that property and identified that there was an ability—based on the transition of the southern side of that block—to increase the rents and increase the value of the building.
We approached a broker who had previously tried to sell the building for the Dalloul family, and I said, “Would you go to them directly and see if we can work out a transaction to buy the property?” We were unsuccessful but spent a lot of time with them. They then put the building on the market, and we bid again and again and again. We weren’t able to accomplish that differential—as well the market wasn’t able to meet their number.
We had developed a nice relationship with the family. We talked about doing joint ventures and other possibilities, and through those discussions we realized we had similar goals for the building. They had done a lot with the building. They’d bought it in ’83, and times were very different in Times Square. There were a number of clubs that were an eyesore, and they helped clean up the area. They have a letter from the police chief thanking them for helping to get rid of one of the clubs in 1984. They also did a lot of things to upgrade the building, and I think in this last push they needed someone who had that focus.
I think they were comfortable that we were the group that understood the building over the time we spent with them, which was over two-and-a-half years. They were comfortable with my vision and felt that I knew and cared for the building—maybe not as much as them, but almost. We then started working on a transaction, which turned into the long-term lease we have now.
What is your vision for Bush Tower?
It has a great history, but it has also fallen behind the rest of the neighborhood. When I look at the building, I see it in a very positive light. It is what it is—you’re not going to change that. It’s never going to be a glass tower, but that’s O.K. because it is beautiful in its own skin. What made us very positive about the building are its light and air, its ceiling heights and some of the authenticity. While it does sit in a glass tower neighborhood, not everyone wants to be in a glass tower, and I think that having a building that has these attributes is very beneficial from a leasing standpoint. What we are going to do is accentuate the beauty of the building.
The first thing we’re going to do is we’re going to change the façade. We’re going to add a little more glass, and, while the lobby was renovated three or four years ago—and they did a nice job—I think we’re going to redo that and try to make it like a jewel box. We are going to renovate the elevators, and then we are going to prebuild units that really accentuate the light, the air, the views and the ceiling heights. When you look at the building, even though it’s a mid-block building, because of the plaza between Bush Tower and 1095, you actually get a ton of windows on the easterly façade looking east, which is as wide or wider than a double-wide street. It feels more like a corner building. The floor plates in the base, which are 15,000 to 16,000 feet, have 50 windows, and most corner buildings have 20 to 25 windows. The ability to put smaller spaces in line is terrific.
We also looked at the marketplace and felt there was a situation where the leasing velocity was very heavy in the under-10,000-foot market. It represented about 30 percent of the marketplace, while the availability was 10 percent, so there was something offline there. The building from floors 11 to 29 has floor plates of 2,500 to a little over 5,000 square feet, and to get a full-floor identity in that size range is very rare, especially on Sixth Avenue, which has very large, 2-million-square-foot corporate buildings. In the base, you can have full floors, or you can divide them up, because you have windows and because of the light and air. It gives us a lot of flexibility.
What is the time line for the work you plan to do? We are going to start our marketing in the first quarter of 2014. Our plan is to do a couple of prebuilt units and have our renderings of what we are planning on transitioning the building into. We’re also beginning our process of going through Landmarks for our façade work, because our building is a landmarked building. That will be a little bit behind the early part of our work, but I would say within a year to 18 months we should be in a good position to complete a good portion of our work and complete our leasing program.
That area of the city is going through a transformation. How do you see this project fitting in?
I think that we will be a nice addition to the neighborhood. The current owner has done a very nice job working through this transition, because as you can see right now there is a lot of construction, the tenants in the building have lived through a lot of noise, and that’s very difficult. I think they’ve done a nice job.
We look at it and think this work should be done in the next six to 12 months, and what the block will become is more like the northern side of the street where you look across and you see Aureole and you see a beautiful 1 Bryant Park and you see a beautiful 4 Times Square. I think you’ll look at the southern side and see a beautiful Knickerbocker, you’ll have a glass Hilton Garden Inn, you’ll have the Cubes, and I think what we’re doing will fit right within that block.
What tenants will be attracted to the repositioned building?
I think the tenants will be similar to the types of tenants that are in the neighborhood right now. I think we see a mix of financial groups, pension groups, new media and technology. I think what’s interesting about this is, because of its location, you’re at a crossroads. I think a lot of people will be drawn to it.
You also have a large project on 53rd Street, Baccarat Hotel and Residences. Where does that project stand?
It’s a very exciting project for us. It’s a terrific location—one of the best in the world. You’re across from MoMA, right in the Plaza district.
Firstly, there is a library component. The library will be put back, and it’s going to be beautiful. On the base, we’ll have a 114-room hotel, and I believe this will be the finest hotel in New York City, with Barry Sternlicht’s vision for Baccarat. Above that, you have condominiums—approximately 60 different units. It’s a great location for people that are looking for an exciting atmosphere.
What size will the condominiums be?
It’s a mix. You have one- to four-bedroom apartments, and then you have a penthouse, which is a duplex. You get a nice mixture, because the hotel below creates different types of buyers. The sales volume has been very successful.
Where do they price?
The average pricing is approximately $4,000 per square foot. I can’t go into much detail, but as you can imagine the market is very strong.
When you look at the market, where do you see opportunity? Are you bullish?
Each sector has its own story, and each segment also has its own story.
We’ve been very, very bullish over the last number of years on Downtown. Being located so close to it, we were able to understand the transformation that was happening—seeing the tourists, seeing the residents, understanding that it was more than the Trade Center. I remember 20 or 30 years ago, when people didn’t really want to work Downtown, and today people do want to—it’s a very exciting area.
We are focused on residential when it’s a really terrific location or priced below the market. Otherwise, we aren’t interested. Hotel is very similar—it’s got to be a really good location, and pricing has to be good, or we’re very wary.
We did think there is opportunity on the office side, specifically in Midtown. Midtown South is extremely strong. Everyone wants to be there, but ultimately they’ll come back to Midtown. One of the reasons we focused on Bush was we felt it was a terrific location and leasing would come back to that neighborhood.
Why have you elected to focus purely on New York?
The three partners in the firm each has 20-plus years of experience in New York, so we really felt we understood the pulse of each neighborhood. We tried to differentiate ourselves, because there are few cities where a property can be so many different things—typically, it’s obvious what it will be. In our view, it’s not that way in New York City. We definitely look at projects in a different way than most, and we try to find the highest and best use at that moment in time.
From a construction standpoint, we wanted to make sure we can do both renovations and ground-up development, but they are very, very different, and I think having that expertise allows us to go after any type of property.
What are the differences in doing renovations versus building ground-up?
The buildings we’ve bought that were existing structures typically had something very special about them. They’ve had terrific ceiling heights and tremendous light and air. They typically don’t build buildings that have the same features as they did in the early 1900s, and I think if you’re able to find properties in a good location that have these attributes you are ahead of the game.