Bloomberg Businessweek - USA (2020-12-21)

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BloombergBusinessweek December 21, 2020

$32milliona yearinrenttotheowner

ofthegroundbeneathit.That’s the

CooperUnionfortheAdvancementof

Science& Art,a downtownschoolcre-

atedin 1859 toprovidefreecollegeedu-

cationtotheworkingclass.Theground

rentleapsto$41millionin2028.Rosen

sayshe’shopingtopersuadetheschool

to restructure the arrangement. A

spokeswomanforCooperUnion,how-

ever,saysit’scountingonthemoney

tofunda plantobringbackfull-tuition

scholarshipsforundergraduates.The

schoolhasn’tofferedthemtomostnew

studentssince2014.

“Aby isoneofthemostcreative

peopleI’vemet,”sayshisfriendand

fellowpropertymogulTonyMalkin,

CEOofEmpireStateRealtyTrust.He

saysthegroundrentis Rosen’sbiggest

obstacle. Malkin knowssomething

aboutolderskyscrapers:Hiscompany

ownstheEmpireStateBuilding.

HesaysEmpireStateRealtyTrust

spentmorethan$400millionover-

haulingtheEmpireStateBuildingso

thecompanycould raiserentsand

increaseprofitability.Butit ownsthe

land beneath the building. What’s

Malkin’sadviceforRosen?“Ihaveno

comment,”hesays.

R

osenwasbackatworkina

newofficeinRFR’sSeagram

Building, another land-

mark,assoonasNewYorkGovernor

AndrewCuomoallowedthecityto

beginreopeninginJune.He’sthere

inSeptember,recliningina chairin

a conference roomdecorated with

thelateGarryWinogrand’sblack-and-

whitephotosofNormanMailer,Nelson

Rockefeller,AndyWarhol,andother

NewYorkcharacters.“GoodoldNew

York,”Rosensays,gazingatthem.“Or

America.Orwhat’sleftofit.”

Rosentriedtomakeit easyforhis

110 employeesinthecitytoreturnto

theofficewithhim.Car servicewas

provided,lunchserved.Suburbanresi-

dentscouldcrashatRFR’sluxeGramercy

ParkHotel,whichwasclosedtothepub-

licforthepandemic.“Itoldeverybody,

‘Guys,youwanttostayTuesdaynightor

Wednesday?Bemyguest,’” Rosensays.

“ ‘Breakfastis at9.Thenshowupatthe

officewhenyoufeellikeit.’”

RFR’sentireworkforcereturned,

butit hasn’thadmuchcompany.Rosen

saysonlyabout12%ofhisbuildings’

occupantsareback.Inhisview,com-

panieshavebeentoo“nice-nice”with

theiremployees.HesaysdeBlasio’s

shiftingpositionsonschoolreopen-

ingshaven’thelped.Nor,Rosensays,

didtheunrestaccompanyingthesum-

mer’s BlackLives Matter protests.

“Policedisappearedfromthestreet,”

hesays,peeringoutthewindow at

Park Avenue. “I’m not a law-and-

order guy, but I wouldlike tosee

policesomewhere.”

InSeptember,morethan 150 New

Yorkbusinessleaderswroteanopen

lettertodeBlasiourginghimtodo

somethingaboutthecity’sdeteriorat-

ingqualityoflife.Rosendidn’tsignit.

He’sfriendlywithdeBlasioandgetsto

tellthemayordirectlywhathethinks

ofhim.“He’sgotanearfulfromme,”

hesays.Notthatitdidmuchgood.

RosensaysdeBlasio,who’snearing

theendofhissecondtermandpro-

hibitedbylawfromseekinga third,

iswallowinginself-pity.“He’sdone,”

Rosensays.“He’sjustcheckedout.”

A deBlasiospokesmandefendedthe

mayor’srecordonschoolreopening

anddisputedthechargethatdeBlasio

is nolongerfullyengagedinhisjob.

Rosen saysthe city’sfuture will

improvenextyearwhenNewYorkers

replacedeBlasio. He’sa fanofRay

McGuire,theformervicechairmanof

CitigroupInc.whoresignedinOctober

torunformayor.Rosenis alsohopeful

thatPresident-electJoeBidenwillpush

througha stimuluspackagethatwill

includebillionsforthecity.If theU.S.

SenateremainsinRepublicancontrol,

however,Bidenmaybeconstrainedin

hisabilitytobea savior.

Inthemeantime,Rosenistryingto

navigatehiswaythroughthepandemic.

Itisn’teasy.HesaysRFR’sthreeNew

Yorkhotelsandsixrestaurantswillbe

closeduntilsometimenextyear.“Idon’t

knowif we’llgeta springseason,”he

laments.Heestimateshiscompanyhas

beencollectingabout50%oftherent

fromitsretailtenants.Roseninstructs

hisleasingagentstotreatthemgently.

Thelastthinghewantsis vacantstore-

frontsathisproperties.

LuckilyforRFR,itsofficetenants

havecontinuedtopaytheirrent,even

withtheiremployeesworkingathome.

It remainstobeseen,though,whether

Rosencancontinuetosignleasesinthe

SeagramBuildingforupwardsof$185a

squarefoot,morethantwicetheaver-

ageaskingpriceinMidtownof$84,

accordingtorealestatecompanyCBRE

GroupInc.Longbeforethepandemic,

WellsFargo&Co.,whichoccupied

morethana quarterofthebuilding,

saidit wasmovingtoHudsonYards.To

lurenewtenants,Rosenhasembarked

ona $30millionplantoturnthebuild-

ing’sundergroundparkinggarageinto

whathecallsthePlayground,anoasis

witha rockclimbingwall,anindoor

track,a basketballcourt,a boxingring,

anda townhallabletoaccommodate

asmanyas 140 people.

OncethePlaygroundis completed,

Rosensays,tenantswillneverwant

toleave theSeagramBuilding, par-

ticularlyyoungerones.Butevenafter

Covid-19 subsides, how many will want

to sweat and breathe heavily beside

their co-workers in an underground

garage, no matter how much RFR

spends beautifying it?

rosen says about 12% of his buildings’

occupants are back. in his view, companies

have been too “nice-nice” with employees