REBNY Luncheon: Real Estate Now Requires Reinvention

BY Betsy Kim

NEW YORK CITY—The Ziegfeld Ballroom in Midtown Manhattan was packed at the Real Estate Board of New York’s Fall Members Luncheon on Tuesday. Mary Ann Tighe, CEO, New York Tri-State Region, CBRE, moderated the annual panel discussion. Scott Rechler, chairman and CEO of RXR Realty, MaryAnne Gilmartin, co-founder and CEO of L&L MAG, and Marty Burger, CEO of Silverstein Properties, joined the conversation shedding additional light upon a variety of topics under the New York sun.

“Is there such thing as core product anymore?” asked Tighe. “Or does everything have to be reinvented?”

There is still core product but the definition may be different, said Rechler. He referenced the Starrett-Lehigh building, saying of all of RXR’s property, the 20th century building with its two million plus square feet was the one that institutions who come to his firm want to own the most. He defined core as “where investors are going to pay the highest price and own it.”

But he also described a changing definition of core product that’s animating bricks and mortar. “To be successful today you need to be into your customers and your community,” said Rechler. “Starrett-Lehigh is where we started the sense of community, bringing people outside of their offices where they had this great creativity and great community. Whether it was Martha Stewart or Tommy Hilfiger, bringing them into the corridors and then out of the building into the local community.”

He said successfully creating the community is challenging because to make it work is more of an art than science. It means respecting the authenticity of the building and the people. “If you try too hard it gets rejected,” said Rechler. “If you are able to pull it off then you have something special.”

Gilmartin highlighted L&L Holding’s 390 Madison and 425 Park properties, describing them as where people really want to be. She emphasized the renovations are transformations that speak to what 21st century office buildings should do.

She described Terminal Warehouse, the $900 million acquisition, as a “modern intervention to an unbelievable structure that will produce pure magic.” Without sharing details of architectural plans, she predicted the 19th century building would be renewed into a “21st century masterpiece,” and the former warehouse will become one of the most notable buildings in New York City.

These upgrades and transfigurations are requiring 21st century technology integrated with the buildings.

Burger said Silverstein Properties is working on a World Trade Center app with Westfield. It will allow employees working in World Trade Center offices to access any of the tenant vendors in the Oculus, and get purchases delivered to their desks in 15 minutes. Silverstein is also looking to replace building card keys with a phone app. Upon arriving at the building, it would use facial recognition to allow access and to direct tenants to the appropriate elevators. The panel also touched upon a variety of topics including co-working, developing a robust Brooklyn business district, transportation, retail and city politics.

Rechler described the city as reaching a tipping point, where inadequate public transportation, congested commutes, and lack of affordable housing would drive people to leave the city. He has made this point previously, including at an Avison Young presentation, covered by Rechler began to wrap up the talk, reminding people to vote on Nov. 6. He stressed the importance of political leadership in addressing the challenges faced by the real estate community.

The event concluded with Tighe’s friendly, good humored remark: “Scott, I know you thought that this was a panel discussion where we all came to talk about real estate. But we are all really here to ask you when you are going to announce your run for office…” This was welcomed with some applause and convivial laughter, as guests rose from their tables to return to work in buildings across the city.