Crains New York - February 4, 2013 - (Page 22)

REAL ESTATE DEALS T imes Square Capital’s recent lease at 7 Times Square is the kind that landlords dream of in midtown, a market that in recent months has found itself in the leasing doldrums. Eager to downsize its New York headquarters, London law firm Ashurst was going to give up the entire 42nd floor at 7 Times Square when its lease expires next year. Instead, the firm was shown the option of space on a lower floor that was being offered for sublease by the large law firm Day Pitney. Ashurst wound up signing that sublease, which totaled 20,000 square feet. The move allowed Times Square Capital to take the 28,000-square-foot space vacated by Ashurst before that floor ever came on the market.That, in turn, was good news for Boston Properties, the building’s landlord. Building owners in the area have begun to sweat over empty space in midtown as several big spaces have begun to fester without takers. The asking rent for Times Square Capital’s 10-year lease was in the high $70s per square foot. Ben Friedland and Silvio Petriello represented Times Square Capital and were not available for comment. Marcus Rayner, a broker at Cre- sa, represented Ashurst. Adam Frazier, an in-house leasing executive at Boston Properties, negotiated on behalf of the landlord. —daniel geiger Financial firm inks triple-digit lease Investment firm CVC Capital Partners has signed a 10-year deal to expand to the 42nd floor of 712 Fifth Ave. The firm will also renew its hold on the 43rd floor for the same period. The total size of the deal is nearly 20,000 square feet. The asking rent is north of $100 per square foot, a triple-figure sum that has been relatively rare on lease documents in recent months. According to data from Cushman & Wakefield, deals above $100 per square foot dropped to 35 in 2012, from 46 in 2011. The 53-story, 540,000-squarefoot tower at 712 Fifth Ave., owned by the Paramount Group, has catered to boutique financial firms. Deals that involve renewals have also allowed landlords a strong bargaining chip. Several tenants recently have been willing to pay up in order to avoid the costs and disruptions of moving. The capital expense and logistics are especially burdensome for financial tenants, which often have to rebuild costly trading infrastructure if they choose to move. Investment bank Jefferies just laid out more than $100 per square foot for about 112,000 square feet of the roughly 460,000 square feet it just renewed at 520 Madison Ave. Ben Friedland and Silvio Petriello represented CVC Capital Partners in the deal. Paramount was represented in-house by leasing executives Ted Koltis and Peter Brindley. —daniel geiger ‘Made in USA’ sees NYC uptick Continued from Page 3 Schiffer expects to engage in production of up to thousands of units. The company has already signed Abercrombie, Opening Ceremony and Burt’s Bees Baby as clients. It’s also producing uniform accessories, including hats, gloves and scarves, for the 2014 Winter Olympic Games. Orders up by 30% Meanwhile, Stoll America, a 140-year-old knitting-machine seller that also makes apparel,opened an outpost on West 39th Street in 2009 and has been growing ever since.The company employs 21 workers, up from 12 four years ago, and has seen orders increase by 30% since 2010. “Up until now,no one was around where designers could get samples done,”said Marcus Kirwald,product development manager.“They had to send them out, and there was lot of time and frustration involved.” Brooks Brothers has made a name for itself in local production— it has manufactured its ties at a Long Island City, Queens-based factory for decades, for example, and operates two additional East Coast facilities—and is working to strengthen its capabilities. In its neckwear factory, which last year produced 1.5 million cravats, Brooks Brothers employs 300 workers, up 10% since early 2011. Three years ago, the brand overhauled its operations from assembly line to “module,” or manufacturing by team, to become more efficient, and it began producing apparel for other brands, such as Club Monaco and Jack Spade. The clothier now promotes its American-made wares through a special section on its website and specific catalogs—recognizing that consumers are paying attention to the origin of their clothing. (Ralph Lauren was criticized last summer for making the U.S. Olympic team’s uniforms in China.) “It’s really critical as part of our heritage and our culture that we maintain and actually increase American manufacturing,” said Paulette Garafalo, president of international and manufacturing at Chambers’ music Continued from Page 3 nancial resources or organizational capacity to have an impact. Small business owners rarely have the time or money to spend on lobbying. Tentative plans Plans for the nonprofit are still fairly tentative. Mr. Friedman said there were no fundraising goals yet. He mentioned TD Bank, which has been generous in giving to small business initiatives in New York, as one type of potential donor to the new group. The chambers’ members are primarily local companies, from regional banks down to dry cleaners 22 | Crain’s New York Business | February 4, 2013 Brooks Brothers. Asia’s rising middle class also has altered the landscape.Asian shoppers are beginning to covet U.S.-made brands, according to some designers. New York-based designer Patrik Ervell, who launched his eponymous menswear business seven years ago and manufactures 95% of his goods in the U.S.,has noticed that buyers from Japan, China and South Korea are looking to stock only apparel manufactured in the U.S. If it doesn’t carry that label, they’re not interested, he noted. Currently, Asia represents 25% of his wholesale business. Shifting pattern “People have started to fetishize this ‘Made in USA’ thing; it has an aura around it,” said Mr. Ervell, who sells to upscale stores such as Barneys New York and Opening Ceremony. “That period of churning stuff out of China and shipping it here is shifting.” Domestic production is pricier—by as much as 40%—but the gap has been narrowing in recent and pizzerias. Significant expenditures on small business issues could counter heavy spending by unions expected during this year’s mayoral race. It would also blunt the power of labor-friendly candidates whose acceptance of public campaign financing means they will have to comply with spending limits. In the past, the chambers have depended on the Partnership for New York City, which has taken a strong interest in the fight against buck ennis Tenants play musical chairs BARE BONES 650 FIFTH AVE. 99 NINTH ST., BROOKLYN 140 58TH ST., BROOKLYN ASKING RENT; TERM: $69 per square foot; 10 years ASKING RENT; TERM: $13 per square foot; 10 years ASKING RENT; TERM: $6 per square foot; 10 years SQUARE FEET: 7,300 SQUARE FEET: 72,000 TENANT; REPS: Hana Bank; Soon Rhee and Norman Bobrow of First New York Realty TENANT; REP: Eastern Effects Inc.; Brian Kanarek of BKR Partners TENANT; REP: Jacques Torres; Roberto Camacho of Buchbinder & Warren Realty Group LANDLORD; REP: C&F Second Avenue; in-house representation LANDLORD; REPS: New York City; Sharone Levy and Guy Solomonov of Greiner-Maltz LANDLORD; REPS: 650 Fifth Avenue Co.; Robert Stillman and Paul Haskin of CBRE Group Inc. BACK STORY: The South Korea-based financial institution renewed its lease on the 15th floor of the 36-story building. BACK STORY: The film and TV equipment and studio rental company signed a lease for a warehouse location in Brooklyn’s Gowanus, according to The Real Deal. SQUARE FEET: 39,500 BACK STORY: The chocolate maker, which has retail locations in Manhattan and Brooklyn, will house its factory at the 97-acre Brooklyn Army Terminal, according to The Commercial Observer. years. In addition, manufacturing here means that retailers can get smaller batches of products into stores more quickly, reducing the need for end-of-season markdowns. “It’s the unsold portion which becomes the albatross around their necks,” said Andy Jassin, head of retail consultancy Jassin Consulting Group. “It’s a matter of what’s efficient, and we’re beginning to see the efficiency of ‘Made in USA.’ ” And Americans appear increasingly willing to pay for it.About 75% of consumers said they would shell out more for American-made goods, up from 50% in 2010, according to America’s Research Group.Typically, U.S.-made products have been limited to small high-end designers, but now larger mainstream retailers, like Ohio-based Abercrombie, are investing in U.S. manufacturing. “A lot of these stores are strategizing how they can do a ‘Made in USA’ product now because they think the country is ready for it,”said Mr. Schiffer. Even so, manufacturing locally, whether in New York’s garment district or Garland, N.C.—where Brooks Brothers operates a factory— continues to present challenges.Most apparel sellers buy fabrics overseas, because Environmental Protection Agency rules for printing with dyes make local sourcing difficult. Meanwhile, when brands began outsourcing manufacturing and shuttering their local factories decades ago, younger workers, especially in the garment district, started abandoning the field for more lucrative industries. So far, the return of some factories has not been enough to reverse the loss of manufacturing jobs in the city, where fashion jobs have steadily declined from 200,000 in the heyday of the 1960s. “You don’t see the kids of the kids in the factories anymore,” said Alex Garfield, who has been in the apparel industry for more than two decades, currently as a founder of women’s pants brand Peace of Cloth. “A whole generation is missing.” Still, the dynamic is shifting. “Ten years ago, it was six times cheaper to manufacture in China,” said Ms.Garafalo.“Today,it is about three times less expensive, so the opportunity for better margins [there] is reducing.” Ⅲ city-mandated paid sick leave despite being made up primarily of Fortune 500 companies. In 2010, the Partnership commissioned a study on paid-sick-leave legislation that has helped stall the bill for the time being. and Michael Levoff, a former spokesman for Mitt Romney’s 2012 presidential campaign. Though the interests of local small and big businesses may diverge, Partnership CEO Kathryn Wylde welcomed having an additional organization advocate on business issues. “We’ve been doing the same stuff and have been working with them on the same front,” said Ms. Wylde. “So I think it’s complementary to what we’ve been doing.” Ⅲ Election push A source said the Partnership will again advocate for business interests in the 2013 election. Its campaign will be led by former Bloomberg spokesman Stu Loeser LISTEN to a discussion at CrainsNewYork.com/podcasts http://www.CrainsNewYork.com/podcasts

Table of Contents for the Digital Edition of Crains New York - February 4, 2013

THE INSIDER
ALAIR TOWNSEND
IN THE BOROUGHS
IN THE MARKETS
BUSINESS PEOPLE
OPINION
GREG DAVID
DIGITAL NY
SMALL BUSINESS
REPORT: HEALTH CARE
THE LIST
CLASSIFIEDS
REAL ESTATE DEALS
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - February 4, 2013