Walk and Talk with L&L Holding Co's Robert Lapidus Part 2
The second part of EisnerAmper Partner Lisa Knee's interview with Robert Lapidus of L&L Holding Co. features a discussion of 425 Park Avenue, the first Park Avenue full-block development in nearly fifty years.
Lisa Knee: So you mentioned the highest rent payer so this is a good segue into 425 Park Avenue which is the first office building in the last 50 years that's been redone on Park Avenue which I guess when you originally started talking about it you were talking about having rents and $200-$250 a foot we all read that Citadel which is a hedge fund based out of Chicago is recently signed for a $300 a foot for penthouse which is an average rent $175 a foot, what makes that area so special to you at 425 Park and how are you able to get the right balance of the right architect, the right feel to draw those tenants in and collect the rent that you guys put a gamble and said you were going to go out there and achieve?
Robert Lapidus: Well 425 Park is the first block-front new building on Park Avenue in almost 50 years but it's a bespoke office building really speaking to boutique type of tenants, Citadel will be the largest tenant there by far most of the tenants there will be 20,000 feet 40,000 feet. That piece of land we felt was so important that we decided to have a global architectural competition and we actually invited nine Pritzker Prize winning architects to compete, we narrowed it down to four, we spent six months with those four architects and we ended up selecting Norman Foster who has been unbelievably great to work with a real visionary very talented we always try to match what to do in a building with what we think the tenants for that building will need so 425 Park we knew it was going to be hedge funds private equity firms maybe family offices and sovereigns architectural engineering firms that everything passes through to the partners, they're not going to pay that kind of time to rent there but it's a very small segment of the market that we're catering to in that building.
LK: So 425 is a Gold LEED certified building and it's also the first office building in New York City to get the WELL certification as well, can you tell us a little about what that means to the tenants and how did that impact the changes that you had to make for the building?
RL: Wellness is the next level you know LEED certification was something that has been important for a while, how they're going to measure how buildings actually are not just what energy efficiency they promised to do but what that efficiency looks like going forward, how that gets measured will be something, but wellness is really about the whole tenant experience so tenants and their employees care about the entire environment that they're working in, the cost is not that much so in a project that's over a billion dollars maybe it will end up costing a couple hundred thousand dollars, but if you plan ahead of time and do it and you make sure you're sort of getting all the points that you need we just thought it was important for the cutting edge of what 21st century tenants are going to want in their space we wanted to achieve this at 425 as well.
LK: Are you optimistic for midtown east?
RL: New York City is a very old city as you talked about the average age of an office buildings about 84 years old we're older than London we’re older than Paris we're older certainly than all the Middle Eastern and Asian cities, so to compete in the global environment that we're in we need to have modern infrastructure, modern workspaces. The reason why we talked about earlier why the World Trade Center and Hudson Yards are successful is largely to do with new product so New York City really needs us to be competitive and the whole Midtown rezoning concept is a good one, it has to go through a political process, Bloomberg tried to do it through his administration they're trying to get it done now and it will be a good thing for the city. However, buildings don't become vacant overnight so it's not such an easy thing to do so even with the legislation in place it's still going to take a period of time for people to get control of buildings empty them out and redevelop them in terms of what's happening in Midtown what SL Green is doing, what they're proposing at One Vanderbilt is a great thing for the city it's a great thing to invest in new infrastructure here in Midtown which needs it more than anyplace else and also all stuff that's going on with the transportation in Midtown connecting Penn Station to Grand Central by improving the transportation and enabling people to create new product that's what will enable New York City to maintain its status as really the global leader that it needs to be.
LK: Right and attract talent.
RL: Tenants, employers they compete for talent so employers who want to hire the best employees want to be in buildings that speak to their culture and enable them to execute the business plans that they want and it really makes a difference being in your workplace when we go into one of these drab old buildings that have eight foot ceiling heights with not a lot of light and air not a lot of open space it's a very different experience than going into a modern building or one that's been completely revitalized like this one.
LK: Thank you so much for taking the time today to walk through share your story with us explain to us what's going on at 390 Madison, this great project I think we're all going to be looking forward to seeing upon completion at least with walls and windows maybe we'll come back when it's a little bit warmer out, but thank you so much for taking the time and sharing your story with us and telling us a little bit about the projects that you've been working on.
RL: Our pleasure thank you so much have a great day.
In the fourth part of this interview series, EisnerAmper Partner Lisa Knee speaks with Robert Lapidus of L&L Holding Co. about his career path including his transition from real estate lawyer to real estate developer.
EisnerAmper Partner Lisa Knee interviews Robert Lapidus of L&L Holding Co. In the third part, they discuss foreign investors' flight to quality product, the importance of design, investing in New York's 'Downtown North,' and CMBS uncertainty.
Robert Lapidus of L&L Holding Co. was interviewed by Lisa Knee, a Real Estate Partner at EisnerAmper, about the development at 390 Madison Avenue, spaces that institutional tenants are looking for in order to attract employees, the needs of Millennial tenants and more.