One-On-One with RXR Realty CEO and Chairman Scott Rechler
October 01, 2018
EisnerAmper Real Estate Services Group Chair Ken Weissenberg speaks with RXR Realty CEO and Chairman Scott Rechler in the inaugural video in the series. Rechler, referred to by Crain's New York as "the smartest guy in the real estate boom," shares his take on making a project re-imagining an important building work in the most famous part of New York, how doing business in New York appeals to office tenants, and the future of development in downtown Manhattan.
KW: What do you think the future of downtown is?
SR: When you have companies like Connie Nask and Rupben downtown, there's this whole creative class of vibrancy and energy that's downtown and over the next 12 to 24 months as the World Trade Center site continues to finish its redevelopment and transportation hub opens and the parks open and more of the construction fences come down, it's going to become more of a reality for everyone.
This building was formerly leased by Time Warner and Time Warner moved out in July of 2013 and with our 99 year lease, the lease didn't commence until Time Warner moved out. So we actually had the advantage of being able to go through all of our design work and order all of our equipment and supplies to be in a position that we can be moving as quickly as possible. So this year we did a full gutting of the building and we're now in the process of actually putting the finishing in place and by the spring of 2016, we'll be open and the building is going to be extraordinary and it's going to be you know a true 21st century modern interior and this iconic landmark building. One of the things that was a big challenge for us was going to landmarks because this has so many historic elements to it and for the changes that we wanted to make to create better retail space to create this dramatic lobby that works its way through from Rock Center and 51st Street through to 52nd Street where you have the 21 Club and a series of also outdoor spaces and terraces so that people can actually not only get the benefit of being in the building, but really feel the Rockefeller Center presence and energy outside looking over the Plaza on 52nd Street looking over the 21 club.
KW: Wall Street Journal analyzed the numbers on the property and they thought that based on their analysis, you would need 80 dollars a square foot minimum rent in order to make the numbers work. Are you confident of getting that?
SR: I don't know how the Wall Street Journal does their analysis but from our standpoint, we are very confident that we're going to get it. Our first discussions were that proposal out started at low end of 80 dollars a square foot and as we work our way up to the top of the building, we will be into the hundreds plus dollars a square foot with those sweeping views looking downtown and at Rock Center.
KW: What makes New York such an attractive place for foreign investors and your company in particular such an attractive place for foreign investors to invest with?
SR: So while we operate locally, we've capitalized ourselves globally. Of the five billion that was raised, 99 percent of that capital is non-U.S. investors and their investors that are very sophisticated investors that typically would invest directly themselves into real estate. When they look at New York and the competitive nature of this market and the scale of the projects and buildings within this city, they recognize that's a challenge to do. These investors have invested alongside us as their local partner to be able to go and source the types of transactions that we source and then bring our expertise to create value in those assets. It's proven from an investor's standpoint that if you're a long term investor and you want to invest and have a safe haven but also out sized type returns through cycles, New York is a place that should be on the top of your list.