The Canadian King Of New York: Inside The Rise Of Brookfield And What It's Doing Next
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Last year, no one signed more, or bigger, office deals in New York City than Brookfield. The Canadian equity giant owns some of the largest properties on the Far West Side and Downtown, and it has established itself as not only one of the world's biggest property owners, but also one of the leaders of the Big Apple’s commercial real estate scene.
"I think the mission of employers that are paying attention is to lease space in environments that help them motivate and get the most out of their employees, as well as attract and retain them," Clark told Bisnow in an interview at his New York City office at Brookfield Place. “We've been focused on trying to create those kind of environments.”
Brookfield signed almost 3.7M SF of office leases in Manhattan last year, putting it well ahead of its competitors, according to its internal records. On the Far West Side, it scored nearly 60% of all the office leasing in 2017, despite having less than 30% of the available inventory.
Overall, Brookfield’s New York City occupancy is above 95%, and the tenants filling the space are some of the world’s best-known companies. Late last year, EY announced it would move its headquarters to 1 Manhattan West, inking a deal for 600K SF there, joining tenants like the National Hockey League and law firm Skadden, Arps, Slate, Meagher & Flom.
Amazon has signed up for 360K SF at Five Manhattan West, while Dutch co-working company Spaces is taking 103K SF at the complex’s Lofts building. Meanwhile, Bank of America has agreed to lease the entirety of the 386K SF 1100 Sixth Ave. in Midtown, which Brookfield is renovating with The Swig Co.
In all, out of the top 50 biggest leases signed in Manhattan last year, 11 were signed at Brookfield properties, according to CoStar data. No other company in the city has claim to more than three.
On the back of such a prosperous leasing year, Brookfield is looking for new opportunities in the commercial space, Clark said.
Its strength is in its diversified portfolio, one of the reasons he believes GGP’s assets are better owned by the company, despite widespread criticism of the offer Brookfield made to buy the remaining 66% of GGP last week.
In New York City, Brookfield will close on five retail store acquisitions in the coming weeks, Clark said, although he did not elaborate on the deals.
The company is also banking on the future of the multifamily market. The Eugene — the 844-unit residential building at 435 West 31st St. that opened last year as part of the Manhattan West project — is more than 80% leased, according to the company.
Brookfield is also joining with Park Tower Group to develop two apartment towers at the massive Greenpoint Landing project in Brooklyn, the first of which will open in August.
The company has been spending time looking for multifamily opportunities in the boroughs, Clark said, and he expects to be making announcements about those deals soon.
In February, new rental leases signed with some form of concession were more than 47%, almost double during the same period as last year, according to Douglas Elliman’s monthly report.
But Clark still thinks the sector is an extremely safe bet.
“People are going to need a place to live, a place to work,” he said. “Could vacancy creep up a little bit in the short term? Sure. But we're a long-term investor and player.”
In the office market, Clark attributes the company’s success to its focus on transportation hubs like Hudson Yards and Grand Central, designing for millennials and tenant appetite for new development.
“Because of our basis in Manhattan West — where a lot of the leasing was done — we've been able to offer a new product we think is at a competitive price,” he said, adding that credit should be given to the company’s leasing team.
He also believes the collaborative work culture plays a part. The Brookfield headquarters is designed with a totally open plan, Clark said, to foster a team environment.
“Whether you are someone working out in the mailroom, or the CEO or chairman of one of our businesses, you sit in the exact same workspace,” said Clark, adding that he does not have an office and takes private calls in conference rooms if need be. “That’s intentional, we want to have that collaborative culture.”
Clark, who has been with the company since the early 1980s when it was called Olympia & York, speaks in a measured tone, and is known for his lack of bluster.
“Ric and other executives at BAM are very corporate. They are skilful asset managers who put down the shades and do the math,” Investment bank Cowen and Co. analyst James Sullivan told the Financial Times in 2014. “They are not visionary deal makers who have big egos. That is not how they operate.”
Local real estate operatives who have worked with Clark pointed to his ability to quickly identify trends and give the market what it wants.
“He is a good leader. He is a visionary,” said CBRE Vice Chairman Michael Laginestra, who represented the NHL in its deal to take 160K SF at 1 Manhattan West. “[Clark and his colleagues] are not afraid of, and they understand, change, they spend a lot of time looking at the future in a very meaningful way.”
As part of the NHL deal, which will see it moving from the SL Green-owned building at 1185 Sixth Ave. as soon as 1 Manhattan West is complete, Brookfield has agreed to install a branded ice-skating rink during the winter.
It’s a win-win, Clark said, because it will help animate the area. The concept of “placemaking” is what made Brookfield Place in Downtown Manhattan so successful, he believes. The future of the Manhattan West development will hinge on the same idea.
“We are always trying to animate the space,” he said. "It just creates a bit of a mojo, a positive energy around our projects."
Cushman & Wakefield Chairman of Global Brokerage Bruce Mosler, who is leading a team of leasing agents for the Manhattan West development, agrees the live-work-play concept is a major part of the project's success.
“The need to be located in a 24/7 community and to be cognizant of where your workforce wants to be has never been more important,” he said. "It’s not about where the CEO commutes from, and every CEO now knows that."
The Manhattan West development is the gateway to Hudson Yards, and its proximity to both Penn Station and the subway are incredibly attractive.
But the value of the Brookfield name cannot be overlooked.
“Brookfield and their credibility is extraordinarily important to tenants,” Mosler said. “I believe their success was the Brookfield brand.”