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121311 - NY Observer Too Small Too Big Just Right

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									             http://www.observer.com/2011/12/too‐small‐too‐big‐just‐right/?show=all 




                                                                                            


Too Small? Too Big? Just Right.
By Dan Geiger 10:04am


It may have been the kind of problem every tenant wishes it had, but for Wasserman Media
Group it was a problem nonetheless.


Only a few months had elapsed since the firm had signed on at the start of the year to take
roughly 7,000 square feet on the fourth floor of the midtown office tower 444 Madison
Avenue, and already it was clear to Wasserman’s executives that they had significantly
miscalculated the company’s needs.


                             Founded and headquartered in Los Angeles, the sports
                             marketing and talent management firm had broken into the
                             Manhattan market about as well as any company in its business
                             could have hoped. And for Wasserman, success meant quick
                             growth.

                             In recent years it was hired to help sell the naming rights to the
                             new stadium in the Meadowlands built in partnership by New
                             York’s two professional football teams, the Giants and Jets,
                             what John Brody, a principal at Wasserman and head of its
                             New York office said was one of the largest naming rights
                             assignments ever in sports. That deal finally came to fruition
                             over the summer when the insurance company MetLife reached
                             an agreement to have its brand as the stadium moniker in a
                             reputedly $400-plus million transaction that Wasserman
   444 Madison Ave.          helped arrange.

Meanwhile, relationships with two key New York clients of the firm, Pepsi Co. and American
Express, were blossoming.
 
 

“It just worked out that there was a confluence of wins for us,” Mr. Brody said. “We had
been working on the Jets and Giants stadium project since the shovels were in the ground
but we redoubled our efforts in the months leading up to the deal to get it closed with
MetLife.”

Even though Mr. Brody, a veteran of the New York market who worked for Major League
Baseball as a marketing executive before joining Wasserman last year, may have had an
inkling that the company’s business might thrive in the city, the rapidity of it seemed to take
both him and the firm off guard.

Needing to add personnel, Wasserman found itself almost immediately bumping against the
limits of its footprint. It couldn’t simply push out into more space on the fourth floor to
resolve the problem either. Another tenant already occupied the floor’s remaining 12,000
square feet.

Wasserman sought to use its offices at 444 Madison Avenue as efficiently as it could.
Stephanie Rudnick, a spokeswoman for the firm, said that it had even reduced the amount
of space it dedicated to backroom server operations by using cloud computing services that
allowed it to store its data offsite and keep more of the space for employees.

“Casey Wasserman is a huge advocate and early adopter of new technology,” Ms. Rudnick
said, referring to the company’s founder and chief executive, who operates primarily out of
the firm’s L.A. office.

Taking too much or too little space can cause a tricky situation for tenants. Most firms that
anticipate growth commit to more than they need to accommodate expansion. But
overestimating comes with its own risks. A tenant can be left with awkward scraps that are
difficult to sublease if its strategy doesn’t go according to plan. On the flipside, as
Wasserman was finding, too little space can threaten to stifle a firm’s business and force it
into the often challenging task of tacking on additional room.

Because Wasserman’s deal was so freshly minted, the company couldn’t just wait for its
lease to expire to allow it to troll the market for bigger options. Of course, the company
could have subleased the space in its entirety and rented somewhere else, but that would
likely have been a costly and inconvenient process. More than anything else, Mr. Brody said
the firm wanted to stay put.
 
 

The asset at 444 Madison Avenue, situated on the corner of 49th Street, is ideally located for
Wasserman’s business. Mr. Brody said that his old office at Major League Baseball and a
number of other big league professional sports headquarters, like the NFL’s and the NHL’s,
are just a stone’s throw from the property. Major television networks such as News
Corporation, NBC and CBS are also close by in Rockefeller Center and on Sixth Avenue.

“We really loved the building because it was right in the midst of the hub of our business,”
Mr. Brody said.

At first glance, however, the prospects for staying at 444 Madison Avenue seemed dim. Paul
Amrich, a leasing executive with the firm CBRE who handles deals at 444 Madison Avenue
for the property’s owners, had been busy since the beginning of the year marketing one of
the only vacancies at the 42-story property, a block of floors on nine, 10 and 11.

Initially Mr. Amrich had hoped to lease the spaces in a contiguous deal to a single tenant.
When Sinclair Li, a colleague of Mr. Amrich’s at CBRE and Wasserman’s broker, reached
out to Mr. Amrich and the building’s landlord, Westbrook Partners, Wasserman was excited
to learn that ownership would be receptive to the idea of its expansion.

“Originally we wanted to lease the floors together but we were open to changing that
strategy,” said Mr. Amrich, who has overseen a number of successful leasing campaigns at
other Madison Avenue buildings, such as 510 Madison and 660 Madison.

Mr. Amrich and his agency team at the property, comprising CBRE executives Patrice
Meagher, Kerry Powers and Elie Gross, quickly drew up a deal with Wasserman to scrap its
lease on four and have it take all of 10, a roughly 20,000-square-foot space. And just like
that, Wasserman rejiggered its space in the building to nearly triple in size.

“We told ourselves carpe diem,” Mr. Brody said, seeming to hint that even though
Wasserman clearly needed the extra room to grow, it nonetheless took a degree of
confidence to trade up in size at a time when many firms are being cautious to see how the
economy will pan out in 2012.

For Mr. Amrich, the lease with Wasserman didn’t deal any setbacks to his plans for filling
444 Madison Avenue’s other empty floors. As he negotiated with Wasserman in the months
leading up to its recent closing on the 10th floor, he leased the ninth floor to FTN Financial.
 
 

Seeing the wisdom of keeping in close contact with other tenants already in the property to
see if, like Wasserman, they too would be interested in growing, Mr. Amrich found another
existing occupant in need of space. TD Bank, which had a retail location on 444 Madison
Avenue’s ground floor, needed to relocate offices it had from another building in Midtown.
Mr. Amrich struck a deal to place the bank on the entire 11th floor. The bank ended up
wanting to import even more units into the building and in recent months Mr. Amrich
leased TD the second floor as well in another 20,000-square-foot deal.
Now, Mr. Amrich says he has a deal on for the space that Wasserman is leaving behind. He
said that it was too early to reveal who that tenant is because the lease is not yet signed, but
he says it will be with a Fortune 500 company.

“The caliber of tenants at 444 Madison is something that we’ve worked to maintain at a high
level and this deal, just like Wasserman, FTN and other tenants, is in keeping with that,”
Mr. Amrich said.

Dan Geiger, Staff Writer, is reachable at dgeiger@observer.com
 

								
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