Glen Weiss —"Renewing Midtown" (Part 2)

So my job is actually to lease all these old buildings, because we can't always knock them down and we can't always do them over. I've been with the company actually not since 1998, since 1986. So a lot of the stock we own I've known since I was a teenager. So a lot of what Bob said is correct. A lot of things have not changed. So what is my job? I run leasing for the company, but because I've been here so darn long, I get involved with a lot of other stuff. And a lot of that stuff is how do you make the buildings better when you can't knock them down. So one thing that we've been really focused on at our company for many years now is redeveloping our assets. That's been kind of our bread and butter as a company for many years. Some of our architects are here, Dana and Mike, have done a lot of projects for us. Jason from 280, who runs the building for us, we just did 280 Park. So every year for the past, I don't know, six, seven years, we've taken one or two of these old tired midtown assets and try to make them as great as we can without being able to knock them down. So what do we do? The first thing we try, and by the way, they're occupied. So you can't empty them, they're occupied buildings, or at least you hope they're basically occupied. And while you have tenants in the building, how do you redo the lobbies, redo the curtain walls, redo the systems? It's a big, big, big process. So we have a team of professionals who do everything for us in-house, and I work with our development group, our sustainability group, our building management group to make sure we do everything the right way, to make sure we could actually lease the space at optimum value, and at the end of the day we're proud of what we built. It's a long process, I will tell you. These projects from soup to nuts are three years or so from the day you first think about it to the day it's done, to the day it's leased. But it's fun. Jason just went through 280 Park. We started that in 2011, we just finished. Four years, but it came out great from all aspects, including from a sustainability standpoint of course. So I was asked to talk about an asset, 330 Madison Avenue. We've owned 330 Madison Avenue since 1917. Bernie Mendic bought that building in 1978 for, I think, I forgot the exact number, I'm going to tell you was about 10 million dollars. So it's like your gas example. So Bernie was a pretty smart guy, right? So we had this building at Grand Central. Great location. 42nd, 43rd streets, full block front, a half a block from Grand Central Station. It's a nice building. It's 39 stories, has good base floors, it wedding cakes up. The boutique tower floors are spectacular, they're about 10,000 feet. But the slabs, the slabs only 11.6, and the air conditioning hadn't worked for about 20 years. Our headquarters before the Mendic merger with Vornado was at the top of 330 Madison actually, so I actually lived it firsthand, and I managed this building in 1992 for the company, so I knew it very well. So what are the things we decided to do? The first thing we did, we made Dan and Mike crazy with the curtain wall. I don't remember how many versions we looked at, Dan, but we got it exactly perfectly right. Another big thing on this was the lobby. So what we looked at very closely was traffic into and out of the building. The building was a very confusing maze. People coming into Madison, 42nd and 43rd on the sides, and everyone merged into the lobby desk, and it was kind of a mess of people, I will tell you, in the rush hour traffic. So the biggest decision we made from a logistical standpoint was getting everyone into just Madison Avenue now. What that took, there was a long-term lease with Citibank for a large branch, so we had to renegotiate the Citibank lease, split their space in half, so we could create with Dan and team a triple bay lobby centered on Madison Avenue, so people weren't coming from all over the place. And it worked well, but that was a big part of our thinking as we thought about the redevelopment. Of course, all the HVAC brand new, all the systems are brand new in the building, the elevator rings brand new. What we've been doing in a lot of the buildings is a tenant backup generator system. So it's not just a generator which we do for our building systems, we actually have been spending the money in the capital, I'm putting in a generator for our tenants to tap into, and it's been working very well. On the projects, most of the tenants have taken advantage of it, no matter what type of industry they're from. All this sustainability we worked on with Dan and his team in terms of the certification, the Energy Star ratings, etc., which we'll get to in a little while. The elevatoring I talked about, I mean everything brand brand new. So while we couldn't knock it down because it's overbuilt and it was occupied, we literally did everything possible other than knock it down. So the location again is here in red, and Grand Central is here. It doesn't get much better than that location. Grand Central, of course, that big renovation was in the late 1990s, early 2000s. 250,000 people come through here every day. So when the renovation of Grand Central started, that's when people woke up in the Grand Central office district. Prior to that renovation, interestingly enough, when you walked up and down those streets, the buildings were getting tireder and tireder, less occupancy. That office district was worsening because the terminal was getting tired, the buildings were getting old, and people were moving out, not moving in. So what happened? Grand Central was done over and they did a spectacular job, and it kind of woke people up who were commuting into the station to say, "Oh, this is pretty good, maybe we should look now around this section for office space." So what did all the developers and owners like us do? They took that momentum from the station, the momentum from Bryant Park and everything that Giuliani and Bloomberg did in Bryant Park, and they said maybe there is something here to make it better. And certainly it has happened. So all of the blue on this map is new ground up development, and all of the yellow on this map are all the buildings that have been redeveloped since then. So I don't think there's an area in Manhattan with the denseness of this transformation from 41st to 47th, Madison and 5th. And it's pretty staggering actually with what happened here. So our building is in red again right here. So here's 330 Madison, what it was, and here's what it is. Pretty remarkable. So in an occupied building, I think we're about 83% occupied when we started this. We literally put up the new curtain wall and at like two o'clock in the morning we'd go into your space and take off the old curtain wall from the inside, right Dan? Is that with it? Where's Dan? Yes. So we took it, we literally had to work on over because the tenants didn't want us in their space, so we literally put it up and take it out from the inside. But this was really the linchpin of the project and the redevelopment of this property. And this is a close-up of the new facade. Again, this is in process now as we redid everything. It's already five years ago, it's pretty remarkable. Again, the ground floor. So when I was there in 1992, you came in Madison, 43rd, 42nd. Everyone entered here to check in, and all the banks by the way for the elevators are right here, so literally you're walking in and you're going to your bank and everyone was running into each other. Here is the much better version now. Citibank, which was this, shrunk to this, and this became the main lobby centered on Madison Avenue, and you have a beautiful entry into the building to a check-in process at the front hall and then walking nicely back to your elevator bank. Excuse me. So that's the old lobby. So I'm on Madison Avenue, I woke up the back desk. 43rd Street people came here, 42nd here. It was a little bit of a disaster every morning. And this is now in when we did the construction. So again, it's an occupied building. We're redoing the entire lobby not only aesthetically but logistically. So people literally were walking under and around, we created kind of these tunnels while we were constructing around everybody. This is actually a very good example of it on the upper left. These take a lot of thought. The one thing we do in a lot of these projects, we'll put up what we call a dance floor. So for half the job, the guys are working above, and then they swap and go below. And there is the new lobby, a little different. The elevator banks. This was a great idea that we came up with, which was the seating. So because now we really open up this lobby, you check in and here's some seating where you could wait for your clients, customers, or before a meeting before you go into your elevator bank to where you're going. This is now the Citibank relocation. So we literally ripped apart and demolished the entire branch. So they closed the branch for close to a year. So we did the new lease, demolished the entire branch, we rebuilt the branch for them, and then they moved back into the one half, and we took over the other half for the lobby. Here's kind of the temporary branch that went in while we were rebuilding. Again, the curtain wall shot right here. Leasing. So this is why we do all this, or part of the reason, is to lease the space. So the building is about 900,000 feet. We leased two-thirds of the building new in the last five years, pretty remarkable. The head tenant, Guggenheim Partners, they moved in about three years ago. HSBC, the large bank of course, took a hundred thousand feet. Jones Lang LaSalle, the brokerage company, moved their headquarters into the building. So we got a great new tenant roster as part of the whole redevelopment, which is part of the idea, bringing new tenants, get the value in the rents, and make the building much better. And it worked here really well. It really has become a financial services building. So this is everything we did from an energy saving standpoint. All the new chillers that we put in, the exterior of course the re-clad of the building, and then the renovation itself saved a lot of money on utilities. When you add the monies up, savings here is a little over a dollar a foot in operating expenses, which is close to a million dollars a year. So that's good for Vornado and that's also good for the tenants. So we did a big study on all of this before we undertook the infrastructure part of the project. So we got LEED EB certification when we finished. We're now striving for gold. Dan, we're close, right? We're really close to gold certification. Energy Star of course, we're at 82. And the things that we did, obviously our green cleaning program which you've done throughout the portfolio, the recycling, water reduction, the electric chillers we've put in which we're doing in a lot of our buildings right now, and the curtain wall. I mean, the one thing is, as a company, we are very focused on sustainability. When we get into a meeting with a tenant, the first thing they want to know, or maybe the second, but at the top of their list is, "What are you doing in terms of LEED and sustainability?" It's a have to. It's a have to. And we do it every day. We have a complete team dedicated to it. It is really vital to make these buildings work the way people want them to work and the way they have to work. It's a big part for the companies coming into the buildings. For them, it's about recruiting, because a lot of the younger people today who are coming to the workforce want to know the buildings are sustainable for the future, and they want to be able to tell their new people that the building they're coming to does work for them. So this has become a have to. At Vornado, it's not a second thought for us, it's a first thought when we do the redevelopment of these buildings. The thing I'll end with is, it's interesting, you know Bob, you talked about redoing the buildings. We're building two new buildings now. Bob's our architect on one of them at 510 West 22nd Street. The other one's on Ninth Avenue and 15th. So you know, it's been fun again because we built this building, the building you're in today, we built for Bloomberg. The Bloomberg lease was signed in 2001. With that lease, we completely designed the building. We had just missed the turn into where we are today. So this building today, while it looks great, it is great, Bloomberg loves it, in terms of today's world of sustainability, we didn't make it. We didn't make it. We're trying to make it better now, but it was 15 years ago at this point. So with the new buildings, we're now actually for our company learning again what we need to do from a ground up perspective, and it's been interesting, big education. A lot has changed, all for the better by the way. Thank you.