Sun Shining On Lower Manhattan
One World Trade at the Heart of Change
The Lower Manhattan economy is growing more diverse, with an increase of media and other creative companies, as well as technology firms. These trends are visible in relocations, occupancy, and leasing.
In the last ten years, this world-famous market has become home to a vast pool of high-value, knowledge workers as educated young and mid-career adults forego the suburbs in favor of the subway- and PATH-connected neighborhoods of Downtown Manhattan, Brooklyn and the cities along New Jersey's Hudson River waterfront.
The 391 companies that have relocated to Lower Manhattan since 2005 represent a broad range of industries. Creative Services (media, advertising, architecture companies) leads the way with 28% of relocations by square footage leased. Professional Services account for 24% of relocations, the FIRE sector (finance, insurance, and real estate) for 22%, and Technology companies account for 5%.
Large blocks of office space in Lower Manhattan continued to be absorbed at a rapid rate in 2012 – 17 transactions over 100,000 square feet were completed, nine of which were new leases and eight renewals. This includes the World Trade Center where Condé Nast signed a 133,000-square-foot expansion to take a total 1.2 million square feet at One World Trade Center. The U.S. General Services Administration also finalized their option to lease 270,000 square feet for 20 years. Those agreements brought the 3-million-square-foot office building to more than 55% leased – and shows the major contribution One World Trade Center is making to the growing diversity of the dynamic market.
Sources: Alliance for Downtown New York, Inc., Cushman & Wakefield
For more information on One World Trade Center, visit: www.onewtc.com
One World Trade Leasing Team
"As co-exclusive agency broker for The Port Authority of New York and New Jersey and the Durst Organization, we are engaged in playing a central role in the success of One World Trade Center – and witnessing the transformative impact this iconic building is having on its new tenants, all of Manhattan, and you could say the world."
– Tara Stacom
Executive Vice Chairman, New York, Cushman & Wakefield
Consolidation Transforms Deloitte’s Workplace and Revitalizes Toronto’s Financial Core
Deloitte¹s bold decision to consolidate multiple offices across the Greater Toronto Area will not only see all employees working together under one roof, but has also kicked off the development of a new 980,000-square-foot office tower, and will ultimately rejuvenate an entire city precinct.
Once completed in 2015, this collaborative effort between Deloitte, Cushman & Wakefield and Brookfield will transform one of the last neglected core areas in downtown Toronto into a vibrant urban community with street life, restaurants and entertainment.
Cushman & Wakefield successfully negotiated complex lease terminations or extensions for existing locations to align with the timing of the consolidation. At the same time, our Strategic Occupancy service under CIS worked closely with Deloitte and the Brookfield design team to articulate the firm's vision for a collaborative workplace, resulting in ‘out-of-the-box’ modifications to the property, which aims to achieve the highest LEED Platinum ranking.
Thanks to this joint effort, Deloitte will realize its vision to create a 419,000-square-foot “office campus” that taps into the buzz of a desirable downtown location and reinforces its commitment to its clients, people and corporate responsibility objectives.
Urban Allure Gains Traction
In cities around the world, both creative-class sectors and traditional sectors are heeding the call of revitalized downtown locations.
Organizations are seeking space in sustainable office buildings or retrofitted properties that offer reduced operating costs, increased density, better light and air quality, and support employee-focused occupancy strategies that attract and retain talent.
A 2012 CoreNet Global survey of 500 CRE executives found that over 70% indicated that the gross square feet per person in their organization would drop to 100 square feet or below over the next five years, down approximately 55% from the current industry average.
City leaders are actively encouraging downtown business growth through tax incentives, cluster strategies and infrastructure development programs.
Young people, along with would-be retirees, continue to settle in central areas where jobs, housing and vibrant lifestyles are more easily accessed.
Prior to 2011, suburbs in the U.S. had consistently outpaced big cities since 1920, with the rise of the automobile. Most recent census estimates reveal a changing dynamic as of July 2012. Cities with booming regional economies are growing the fastest, closer-in suburbs linked to a city with public transit or well-developed roadways are benefiting, while farther-out suburbs are seeing the lowest growth rates.
China, India and U.S. to Lead World Construction Growth
World construction activity will accelerate by $6.3 trillion or 70% by 2025 with activity driven by rising populations in emerging economies and increasing urbanization, according to The Global Construction 2025 report from Global Construction Perspectives and Oxford Economics.
"Urbanization is one of the largest challenges facing the human race. Some two billion additional city-dwellers are expected by 2050, giving rise to challenges around providing power, water, sanitation, housing, offices and transportation, as well as doing this sustainably and developing new cities of the future," said the report, which was written by industry experts.
While two thirds of global construction will be focused in China, India and the U.S., the authors noted that activity will increasingly be driven by Vietnam, Indonesia and the Philippines, which they termed the new Asian Tigers.
Although China overtook the U.S. as the world’s largest construction market in 2010, the report still forecast healthy growth of 40% in U.S. construction by 2025, with the volume of construction output expected to grow by over 75% between 2012 and 2025.
While any upturn in Europe is expected to be very weak, the UK construction sector was forecast to expand by almost double the average rate in Western Europe.
Ericsson Telecom S.A. de C.V.
Services Used: Corporate Occupier & Investor Services
Mexico Locations Meet Business Objectives
Ericsson selected Cushman & Wakefield to provide Project Management and Facilities Management Services after deciding to locate its Global Network Operation Center (GNOC) in Mexico. As part of their commercial strategy, Ericsson decided to centralize their operations in strategic countries within the region that offer low operational costs and highly trained technical staff; hence, Mexico was chosen for their GNOC in the Americas.
"More and more, our clients are looking for a partner that can deliver services for their networks from end to end while keeping low operational costs. With this new center, we are investing in increasing our capacities to satisfy these new demands with remote services.”
– ORVAR HUNTING
Service Delivery Chief, Ericsson
Currently, Cushman & Wakefield’s Facilities Management team delivers services for Ericsson in six different sites (four transitioned and two new), covering 436,000 square feet.
The complexity of Ericsson’s operation includes 24/7 critical services at the GNOC sites, as well as coordinated processes with North America (U.S. and Canada) and South America (Brazil, Argentina, Colombia and Chile).
Cushman & Wakefield assigned an experienced regional team to coordinate efforts between countries, implemented an “Integrated Workplace Management System” (Big Center), and relocated our professionals from other accounts to Ericsson as part of the strategy to ensure the successful delivery of services.
Toronto, ON, Canada
Services Used: Corporate Occupier & Investor Services, Leasing
Consolidation Launches Office Tower and Transforms Toronto's Financial Core
Deloitte, a leading professional services firm in Canada and around the world, provides audit, tax, consulting, and financial advisory services. Faced with logistical challenges due to employees being dispersed across multiple locations throughout the Greater Toronto Area, Deloitte recognized that the time had come to refresh its business model in order to remain on the cutting edge of changing business dynamics.
Deloitte engaged Cushman & Wakefield to conduct a comprehensive review of Deloitte's Toronto office requirements. After analyzing numerous scenarios and options, it was determined that the best solution to achieve the greatest occupancy value was to consolidate the firm’s business into one holding.
With more than 3,500 employees to consolidate across multiple offices, Deloitte required over 400,000 square feet of office space in a downtown core location.
In June of 2012, Deloitte announced plans to consolidate its GTA offices under one roof – namely the proposed East Tower of Bay Adelaide Centre owned by Brookfield Office Properties. By agreeing to lease 419,000 square feet – about 43% of the building – the project was able to proceed.
Located adjacent to the Bay Adelaide West tower in the heart of Toronto’s financial district, the 44-story, 980,000-square-foot office tower is expected to achieve the prestigious LEED Platinum distinction upon completion in 2015.
As the tower’s anchor tenant, Deloitte will gain a prestigious downtown address with naming rights to the tower and, most important, the opportunity to transform its workplace and culture by creating a visionary, collaborative office campus in one of Toronto’s most desirable locations.
Not only did the successful transaction kick off a new office development, it also became a “city-building” exercise, incorporating unique design features that will reimagine what had become a “tired” precinct into a vibrant downtown destination.
Cushman & Wakefield successfully negotiated lease terminations and/or extensions for existing locations to align with the timing of the consolidation and our Strategic Occupancy service worked in close partnership with Deloitte, Brookfield and the design team to deliver "out of the box" solutions. This remarkable collaborative effort enabled Deloitte to realize its vision to create a dynamic workplace in keeping with its commitment to its clients, its people and its corporate responsibility objectives – and, immeasurably, to downtown Toronto.
Fort Worth, TX, U.S.
Services Used: Capital Markets, Leasing
Negotiation Expertise Secures Broadcast Studio
Cushman & Wakefield was engaged by NBC Universal to evaluate the disposition of their 64-year-old, 66,000-square-foot, owned broadcast studio on 26.5 acres in Fort Worth. The expectation was to relocate into a new state-of-the-art broadcast facility that would be more efficient and position the firm to compete for the next several decades.
After performing due diligence on several existing buildings and land sites, NBC selected a master developer for Centreport, just south of DFW International Airport. NBC Universal was able to purchase 8.1 acres. Additionally, Cushman & Wakefield was able to negotiate and secure significant incentives, including tax abatements with the creative solution of deeding the owned facility to the City of Fort Worth in exchange for additional incentives.
The final lease concluded with a 75,000-square-foot build-to-suit including a Purchase and Sale Agreement. Construction commenced in July 2012 and is scheduled to be completed on time during the fourth quarter of 2013.
Reel FX, Inc.
Dallas, TX, U.S.
Services Used: Leasing
Urban Office Deal of the Year
Recognized as Dallas Business Journal's Urban Office Deal of the Year, Reel FX Inc., an award-winning creative studio specializing in animation and visual effects for feature films, commercials and live-venue projects, secured its footprint in Dallas’s Deep Ellum submarket in July 2012. After seven years in the building, Reel FX acquired the 73,200-square-foot property to serve as its corporate creative headquarters.
“We have called Dallas home for almost two decades, and our goal was to remain in Dallas and in Deep Ellum. We couldn’t be happier to stay in the building we consider an important part of our past, and now, our future.”
– KYLE CLARK
Reel FX Chief Operating Officer
Cushman & Wakefield was engaged to represent Reel FX with their requirement.The challenges involved addressing parking, company culture, neighborhood characteristics, and lease-versus-own potential, and accommodating the company's continued growth. From a transaction standpoint, this assignment required a sublease buyout, complex acquisition terms, significant municipal incentives and a parking solution.
The intense competition from the surrounding municipalities made relocating to another part of the city a viable alternative. There were two shortlist options, but, in the end, given the connection to Deep Ellum, the existing building and location – and that the City of Dallas showed its commitment to Reel FX and the creative industry by providing compelling incentives – Reel FX was convinced that remaining in their current location represented the very best solution.
SÃ£o Paulo, SP, Brazil
Services Used: Valuation & Advisory
Portfolio Valuation Completed in Record Time
Cushman & Wakefield won an RFP to perform the valuation, documentation and physical check of all landline related properties owned by Telefônica Brazil in São Paulo. This assignment encompassed producing the formal valuation reports for 594 assets and documentation checks for 814 assets in all 645 municipalities of the state of São Paulo.
With over 1,408 properties in total, Telefônica was under an extremely tight schedule and required the assignment to be completed in less than five months. Given the number of assets and their locations all over the state, a special team within Cushman & Wakefield was assembled, along with the hiring of third-party service providers, to complete the thorough documentation checks in the outlying locations.
Originated by our Capital Markets team, this opportunity created a new relationship for Cushman & Wakefield, and Telefônica has since hired the firm to perform other services. As well, this instruction opened the door for similar assignments in other Latin American countries and our team was recently invited by Telefônica for a potential new assignment that could be twice as large as the first one.
Brown Brothers Harriman
Boston, MA, U.S.
Services Used: Capital Markets, Corporate Occupier & Investor Services, Leasing
Iconic Art Deco HQ Rejuvenates Market
Cushman & Wakefield began working with BBH’s Boston requirement in 2010 to refine its real estate objectives to maximize efficiency and minimize costs while retaining a strong Boston presence and then develop and execute a strategy to meet those goals.
Ultimately, BBH chose to consolidate three different offices into 411,128 square feet at 50 Post Office Square, the former New England Telephone corporate headquarters located at the head of Post Office Square Park. The firm will accommodate more than 2,100 employees in the low-rise floors of a fully gutted, renovated and modernized Boston icon.
BBH's 50 Post Office Square served as the catalyst for the preservation and renovation of one of Boston’s most iconic Art Deco buildings in the heart of the city. In economic and social terms, it represented the tipping point for the Financial District’s low-rise space. BBH is leading the charge among Boston’s corporations back into the Financial District’s towers, ultimately reducing a long-standing bulge of low-rise vacancy in Boston’s CBD.
Services Used: Leasing
Facilitating Expansion for Luxury Retailer
Cushman & Wakefield was appointed to identify additional premises to support the expansion of the Burberry business in London. Our team was required to leverage its extensive landlord contacts and off-market knowledge to identify solutions in what was an undersupplied local market. We were able to present a choice of options to Burberry, leading to a pre-let of 1A Page Street, SW1, a 127,000-square-foot, 11-story building located in an adjoining street to its present property Horseferry House.
Cheongdam, Seoul, South Korea
Services Used: Leasing
Ideal Location for First Flagship Store
Cushman & Wakefield was retained by Burberry Korea to find a high-street location in one of the most prestigious areas in Seoul for their famous brand.The area known as Cheongdam is extremely difficult to acquire space in due to high levels of competition among luxury brands and a relatively small supply of space.
In spite of the tight market conditions, our team was able to secure a corner property to build a flagship store that more than met the client's expectations.
The store will represent a landmark location for Burberry – their first high-street store in the country.
Hudson Pacific Properties, Inc.
San Francisco, CA, U.S.
Services Used: Leasing
Innovative Tenant for Emerging Tech Corridor
With the influx of major technology tenants, including Twitter, Yammer, One Kings Lane and Dolby Labs, downtown San Francisco's Mid-Market corridor has rapidly emerged as a major Bay Area technology hub. In October 2012, Cushman & Wakefield represented Hudson Pacific Properties in the leasing of 332,492 square feet of space at 1455 Market Street to leading mobile commerce company, Square, Inc. The deal – San Francisco’s second largest in 2012 – was awarded “Best Office Lease” by the San Francisco Business Times.
The Square lease converted former windowless, data-center space into highly efficient creative tech space. Architectural plans for the new Square office take advantage of the 100,000-square-foot floor plates and high ceilings, creating the largest open-plan, collaborative space available in San Francisco. Consequently, 1455 Market Street has become one of the most sought-after buildings in the Mid-Market corridor.
Toronto, ON, Canada
Services Used: Leasing
Strategic Portfolio Optimization for Rona Canada
RONA Inc. engaged Cushman & Wakefield Retail Services to undertake a lease and sale disposition of 24 big box locations across Canada along with acquiring new smaller leased locations called Proximity stores.
The roll-out of the new formats for RONA was designed to provide its consumers with convenient neighbourhood locations that offer a higher level of service and product lines targeted to the local market. Our team assisted the retailer in finding strategic and competitively priced locations for expansion sites, and provided professional real estate guidance to streamline the site-selection process. Also, as part of a strategic portfolio optimization plan, RONA is in the process of subleasing a number of quality big box locations, from 15,000 to 120,000 square feet.
Services Used: Corporate Occupier & Investor Services
Successful U.S. Embassy Relocation
After a successful disposal of 20 Grosvenor Square, Cushman & Wakefield was asked to identify and acquire a site for the construction of a new U.S. Embassy. Upon completing the post-site acquisition, Cushman & Wakefield was appointed to manage the development process including planning and managing the London build activities associated with procurement.
Cushman & Wakefield was awarded a Certificate of Appreciation from the U.S. Department of State in recognition of the high-quality service rendered, becoming the first supplier to so honored. We continue to advise the U.S. Government (USG) across its London portfolio. The relocation of the USG to the Nine Elms area has already become the catalyst for the redevelopment and regeneration of the Nine Elms Opportunity Area.