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October 14, 2008

Google Saves
Real Estate, Too?


Would you believe the industry to blame for a previous recession might be a savior during this one? Taconic Investment Partners EVP Doug Winshall tells us they've weathered the current market by leaning on tech industry tenants, so we dropped in on his Eighth Ave. office in the hopes of rekindling the magic of Y2K.


The telecom/dot-com industry is alive and thriving, which bodes well for Taconic, owner of 111 Eighth Ave. The 16-story asset may look small compared to other Manhattan trophies, but don't let its height fool you—at 3m SF, it's the borough's second-largest office and Taconic's crown jewel. It's fully occupied, home to Google, Sprint, and Verizon, among others. Doug, posing with antique telecom equipment, hinted at an additional 70k SF lease that should be signed soon and promises it will be an "interesting deal" in light of today's market. We tried bribing him, but he remained tight-lipped on the tenant. Of course, Sprint and Verizon might let us tap his phone if we asked nicely. What? Too soon?


The building's horizontal structure makes it popular among telecom tenants because it allows for colossal cooling and back-up power structures on the roof—a tiny Doug gives you a sense of scale. It's also the largest carrier hotel in Manhattan. (For non-tech geeks: that means it holds a lot of data centers.) 111 Eighth Ave. also illustrates a key to Taconic's success: adaptive reuse. The building was once an industrial storage facility. The firm's three current office projects—375 Pearl Street, 429 East 75th Street, and the BankNote Building in Hunts Point, Bronx—are also adaptive reuse developments.


Taconic is in the process of finishing pre-development on 375 Pearl, a '70s-era building that originally held switching equipment for Verizon pre-pre-predecessor New York Telephone. ("We're all connected" was prescient considering all the phone companies merged again.) It eventually housed 2,800 back-office Verizon employees; however, it wasn't built as an office and lacks sufficient windows and elevators. Taconic plans to re-skin the building and install more elevator shafts. Eventually, the potential LEED Gold building will recall One Bryant Park's clear glass fa?ade, also designed by architectural partner Cook+Fox. Construction will commence upon landing an anchor tenant.


In a JV with ABR Partners, Taconic is also finishing up 429 East 75th Street, a former carriage house-turned parking garage being converted to a 35k SF medical office. And it's turning The BankNote, a former currency-printing facility, into a center for creative sector tenants with JV partner Denham Wolf. The building is currently undergoing window replacement as well as entrance, lobby, elevator and other renovations.


Doug, who headed Trizec Properties' New York office before joining Taconic earlier this year, says the firm is seeking opportunities in all five boroughs. In the meantime, he showed us the massive elevator motors on 111's top floor. If you thought the Argonaut Building's car elevators were impressive, these can actually lift semis up to every floor of the building. Perfect for . . . lazy UPS men?

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