Real Estate Forum

From a commercial real estate perspective, last year was interesting, to say the least. Tech fever dominated the first few months of 2000, as Internet-related startups swallowed up any available space around and VC capital was tossed out at anything that ended with a dot-com. However, by spring, this enthusiasm for things web-based cooled and a more temperate climate returned.

But that's not to say that the year ended on a quiet note. In the closing weeks of December, Manhattan's Rockefeller Center fetched a cool $1.85 billion. Tishman Speyer, which already owned a stake in the 12-building complex, and the Chicago-based Crown Family picked up the landmark asset. This sale, as well as several others, demonstrated the renewed popularity of CBD trophy properties among investors.

Although lease deals involving tech firms received most of the attention, there were a slew of mega-deals inked by traditional space users. Take Arthur Andersen's 626,176-sf deal at Times Square Tower in New York City. Or Procter & Gamble Paper Products' lease of a 1.7-million-sf warehouse facility in Mehoopany, PA.

The development segment also posted a memorable year. Chicago witnessed the start of two major towers: the 1.5-million- foot Dearborn Centre and the 700,000-foot 191 N. Wacker. In Boston, one of that city's largest spec towers, 111 Huntington Ave., is set to bring 931,000 feet of prime space into the supply.

On the financing side of the equation, conditions did not appear to be as robust as in prior years. Nevertheless, solid deals were still able to achieve funding. GMAC provided a $1.3-billion construction loan for Columbus Circle in Manhattan and the AARP secured $204 million through Spaulding & Slye Colliers to acquire its DC headquarters building.

The following transactions attest to the high-stakes dealmaking that went on during 2000. These deals, some of the largest closed last year, were submitted by the participating firms. In addition to the numbers, the stated impact of each transaction on its particular market weighed heavily in its inclusion in this section. Selection was also determined by the thoroughness of each submission.

Leasing
Barclays Lands in MetLife Building In a relocation and expansion of its investment banking operation's North American headquarters in New York City, UK-based Barclays Bank plc leased 260,000 sf in the MetLife Building. The firm's North American banking head-quarters, private banking arm and investment banking division, Barclays Capital, will occupy the lower portion of the 2.8-million-sf tower. Barclays also holds an option to take more space. Anticipated growth of the bank's work force was a factor in the decision to move, according to Shorenstein Co. LP, the San Francisco-based company that represented building owner Metropolitan Life Insurance Co. in the transaction. Insignia/ESG, which hammered out the long-term lease for the bank, also cited the property's 100,000-sf floor plates as a factor influencing Barclay's decision.	Bank takes 260,000 sf.

Sales
Insurers Shed Chicago Trophy Shorenstein Co. purchased the two-million-sf Prudential Plaza office complex in Chicago's East Loop from Prudential Life Insurance Co. of America and Nippon Life Insurance Co. for $375 million. This is the second Chicago trophy for San Francisco-based Shorenstein, which owns the 100-story John Hancock Center. "In terms of relative value, Chicago is very hard to beat," explains John Grassi, Shorenstein's managing director and chief investment officer. "Equivalent space in New York City and San Francisco is double the price. Yet with high-quality assets, we can get returns in Chicago that are equal to or even better than in those other two cities." The Prudential Plaza sale is believed to be the city's biggest in the first half of 2000.	Plaza fetches $375 million.

Development
Shorenstein Develops City Center Ground was broken last May for the one of the first new private office buildings to be built in Oakland, CA in more than 10 years. The 480,000-sf office tower at 555 City Center is being developed by San Francisco-based Shorenstein Co. LP. When completed in 2002, the 20-story structure will take up a full city block facing Clay and Jefferson streets. It was designed to be an extension of the existing pedestrian corridor on Clay Street. Wells Fargo provided the financing and Korth Sunseri Hagey Architects of San Francisco designed the building. GA Retail Asset Totals 515,000 SF Shorenstein Develops City Center	Tower takes up full city block.

For the full story, read the article in the February issue
of Real Estate Forum.