AS the Big Apple’s econ omy cools, the old rules of commercial real estate are changing.
For example, commercial tenants are now starting to get the kinds of amenities heretofore reserved for residential buildings – like concierge service for their em ployees.
“This had no profit motivation,” said Leonard Stern, Chairman & CEO of Hartz Mountain Industries about hiring the Abigail Michaels concierge service for 667 Madison Ave. where rents run from $125 to $200 a foot. “We just thought we are completing, to the extent we can, the luxurious experience of the building for everyone who doesn’t own their company.”
Stern notes that company bosses usually have their own personal assistants and “know all the headwaiters” so such services wouldn’t be of interest to “someone worth $1 billion.” “But 95 percent of the people who work here and come here every day are employees,” Stern continued. “For us to be able to offer something to all the employees – that is extremely valuable.”
Abbie Newman and her partner in Abigail Michaels, Michael Fazio, both have 25 years in the hotel hospitality industry and currently service over 80 residential buildings.
One of their clients, the Carlyle Group, also owns 1180 Sixth Avenue with Murray Hill Properties. At a brainstorming meeting, the idea of adding the concierge clicked, and Abigail Michaels was brought in to service the tenants.
“This kind of service is a natural to spread to many other buildings,” said David Greene, executive managing director with Murray Hill Properties. “We’re providing a service to people who live a 24-hour-a-day life. To the tenant, it is a free service and they pay for what they contract to use.”
Capstone Equities also brought Abigail Michaels into their landmarked 14 Wall St. “Everybody needs to offer value-added at this time,” said Newman. “They are looking to offer value and to differentiate themselves in the commercial world.”
Services commonly asked for include picking up dry cleaning, obtaining sports tickets and making restaurant reservations. “A lot of people ask about dog walking services,” she said. The oddest request was from an executive who wanted the same ice cream his daughter had two years earlier at a restaurant she couldn’t recall in Wisconsin. “That was really crazy and they were ready to pay for it,” said Newman. “We tried to research it and then went to the Institute for Culinary Education to replicate it. Afterwards, the client said it was better than they remembered.”
Lois Weiss
KELLY A BEAR
NYPD Commissioner Ray Kelly, before being re-appointed as the city’s top cop in 2002, worked briefly at Bear Stearns, as did his son Jim Kelly, who worked at the brokerage until it was acquired recently by JPMorgan Chase – he now works for JPMorgan Chase. This information was incorrectly reported in this space on Oct. 19.
STRIB A ZERO
The New York private-equity firm that bought the struggling Minneapolis Star Tribune newspaper more than 18 months ago has given up all hope of making any money off of its soured investment.
Avista Capital Partners officially threw in the towel on recovering any cash from its disastrous purchase of the Twin Cities’ biggest newspaper when it told investors Thursday that it had written down 100 percent of its investment.
The firm added that while efforts were underway to reorganize the paper’s capital struc ture, Avista made clear to investors that it was under no illusions about recovering anything.
Avista, run by former Credit Suisse deal maker Tom Dean, bought the daily newspaper, known locally as the Strib, for $530 million in 2006, putting up $105 million in equity and using debt to finance the rest.
But almost from the start, Avista’s bet that the Strib and the Twin Cities economy were healthy proved to be a bad one as circulation and advertising declines accelerated with the swooning economy.
The complete writedown of the Strib investment probably wasn’t a surprise to investors: Avista in May said that it had written down 75 percent of its equity investment in the paper.
Jay Sherman
NOT BOOED
John Devaney, the trader whose $620 million hedge fund blew up earlier this year without returning a cent to his investors, was not booed off the stage during October’s ABS East conference in Miami. Due to an editing error, a story in these pages last week incorrectly reported that he was. An official from the confab reports that Devaney’s talk was abruptly cut short by a fellow panelist, but that he never was forced off the stage.
