CBRE represented marketing and communications firm Y&R in securing its new headquarters at 3 Columbus Circle in New York City, one of the largest and most creative transactions in Manhattan in 2011.
Under the agreement, Y&R will occupy approximately 340,000 square feet at the 26-story property, owned by SL Green Realty Corp. and The Moinian Group, that occupies the entire block between Broadway and Eighth Avenue between 57th and 58th Streets. A comprehensive redevelopment of the building is being completed in 2012.
“It is a unique location overlooking Central Park and surrounded by light on all four sides, which is very rare in New York,” said Bruce MacAffer, Senior Director, Real Estate for WPP, Y&R’s parent company. “It has good-sized floor plates of 20,000 to 30,000 square feet and a location that appeals to the creative community.”
Y&R had been seeking new space in Manhattan for more than five years, said Eugene Bauchner, Vice President, Real Estate for WPP. “It is very difficult to find large blocks of space in Manhattan — you can count them on one hand,” he said. “CBRE has the ability to find great space that no one perceives as viable and realistic.”
But WPP needed more than great space. Y&R had owned and occupied its headquarters for decades, and the firm wanted to buy as well as lease. “To do a hybrid structure in this marketplace is very difficult,” MacAffer explained. “There are very few developers who want to sell off pieces of their building. Also, most of the time when empty buildings are sold, they are converted to residential because that commands a higher premium.”
CBRE’s long-standing relationships in the marketplace and reputation for creative deal-making led to an agreement that met WPP’s criteria. Y&R acquired a condominium interest covering floors three through eight, and entered into a 20-year lease for floors nine, 10, 18 and 19.
“We created a custom transaction that included both a purchase and lease to meet the needs of the client as well as the ownership of building,” said Mary Ann Tighe, CEO of CBRE’s New York Tri-State Region.
In addition, owner SL Green wanted to close the transaction in time for an analysts’ meeting — just seven weeks after the initial discussions began, said Greg Tosko, CBRE Vice Chairman. “To create an agreement in seven weeks that encompassed all of the issues that come with a large headquarters lease, as well as the design and construction plans, was a Herculean task,” he said.
MacAffer agreed. “CBRE was able to leverage its relationship with the owner to come to an agreement, and through credibility, creativity and perseverance, completed the transaction quickly and flawlessly,” he said. “Their due diligence, technical expertise and thoroughness were invaluable.”
Y&R is expected to move into its new headquarters in the second quarter of 2013. “We have been at 285 Madison Avenue for the past 86 years and if anything, Y&R has come to be the iconic symbol of Madison Avenue,” said David Sable, Y&R Global Chief Executive Officer. “So, in deciding to move, just the sheer uncoupling of ourselves from our historic position was really the single most important issue. It was important to work with people who understood just how important this was to us. CBRE understood that what we are doing is more than moving buildings — we’re moving a culture, a philosophy, a way of life. And in finding 3 Columbus Circle, they helped us make Madison Avenue a state-of-mind rather than a state-of-place. That’s pretty ground-breaking.”
This was the third time CBRE has worked with WPP on a major facility. “CBRE is very creative in coming up with solutions to difficult assignments,” said Bauchner, adding that the firm provides assistance to WPP with strategic planning, site selection, financial analysis and negotiations across the Americas. “The relationship gives us the flexibility to apply internal resources where we need them most.”