Square Feet : Evan Stein

J.D. Carlisle manages about 600,000 square feet of commercial space and nearly 2,000 apartments citywide. Its developments include Morton Square, the Cielo, Gramercy Green, and the Beatrice.

Q Are you the de facto C.E.O.?

A Yes, absolutely. There’s no C.E.O. The chairman is my partner, Jules Demchick. Our chairman is responsible for assemblage of the property, financing, and usually the initial plan. Once the acquisition is done, he moves on to the marketing and we move to the development. M.D. Carlisle Construction is the vehicle that physically builds the projects. With buildings like the Beatrice you almost need to know the end of the movie before you begin.

Q Will the Beatrice, your newest and biggest project, have a happy ending?

A I hope so. I put my grandmother’s name on the building.

Q Was this your most difficult development?

A It’s by far the most expensive, and this was the most complicated. We have several uses in this building, so that takes a tremendous amount of management to understand how all the pieces work together: how the restaurant is working with our hotel, how the residential building complements the hotel. And we have a garage.

We’re certainly not in the black yet, because the building is in its infancy, but from an economic view we’re pleased with the results.

Q What is the occupancy?

A We are 99 percent. Of 300 rental apartments, we have left four penthouses that we are just allowing for occupancy May 1. All the penthouses start at $20,000, up to $23,500 monthly. We’re already getting a lot of activity on them. And the hotel’s doing well; it’s exceeding our expectations.

Q Why rentals and not condos?

A We cut our teeth on rentals. In the ’60s and the ’70s, we built probably 60- or 70-plus rental projects. The rentals are scattered all over Manhattan. Our recent history was condominiums — we had three or four projects that were a function of the times.

It’s hard to put your heart and soul into something where at the end of the day you don’t have a tangible asset anymore.

Q Would you ever consider converting the Beatrice, if, say the market soared again?

A I hope not. I’d be lying to you if I told you I haven’t been asked that before. We have several rental buildings that have gone through four or five real estate booms, but we like rentals.

Q What’s your assessment of the New York market now?

A In the long-term perspective we’re very bullish, but you’re going to have short-term challenges — whether they be economic, political or availability. There are still tremendous opportunities here, and we’re seeking them out.

Q Do you have any other projects in the works?

A We do have three or four projects that we’re excited about. Unfortunately, we can’t talk about them because we’re under confidentiality agreements.

They’re going to be some rental, some condo; three are ground-up and one is a gut renovation. We’re looking at a couple in the outer boroughs at this point in time, and certainly in Manhattan.

Q So why doesn’t J.D. Carlisle have a Web site?

A We get asked that a lot. We’re low-profile people; we don’t usually have to advertise who we are.

Q You knew at an early age that you wanted to be involved in real estate, didn’t you?

A Yes, because my hero was my grandfather, who founded this business — my maternal grandfather, Beatrice’s husband.

He has been my hero since the minute I could understand who he was, and I would have done anything to be with him — to be him. When I was graduating from college, he asked if I would consider coming to work with him. I jumped at the opportunity and 17, 18 years later, here’s where we are. He’s since retired.

Q What was your first job there?

A I went to school for accounting so I started off computerizing their accounting systems, and I got bored very, very quickly. I made the request for an assistant superintendent’s job. I went to work with a hard hat climbing into the demolition. Just being on a construction site every single day helps me to understand how things wind up working, all the nuances that you need to understand.

Q Do you live in any of your buildings?

A I live in Morton Square. One of the advantages of developing is you get a good price.

View the original article here

Square Feet : Evan Stein

J.D. Carlisle manages about 600,000 square feet of commercial space and nearly 2,000 apartments citywide. Its developments include Morton Square, the Cielo, Gramercy Green, and the Beatrice.

Q Are you the de facto C.E.O.?

A Yes, absolutely. There’s no C.E.O. The chairman is my partner, Jules Demchick. Our chairman is responsible for assemblage of the property, financing, and usually the initial plan. Once the acquisition is done, he moves on to the marketing and we move to the development. M.D. Carlisle Construction is the vehicle that physically builds the projects. With buildings like the Beatrice you almost need to know the end of the movie before you begin.

Q Will the Beatrice, your newest and biggest project, have a happy ending?

A I hope so. I put my grandmother’s name on the building.

Q Was this your most difficult development?

A It’s by far the most expensive, and this was the most complicated. We have several uses in this building, so that takes a tremendous amount of management to understand how all the pieces work together: how the restaurant is working with our hotel, how the residential building complements the hotel. And we have a garage.

We’re certainly not in the black yet, because the building is in its infancy, but from an economic view we’re pleased with the results.

Q What is the occupancy?

A We are 99 percent. Of 300 rental apartments, we have left four penthouses that we are just allowing for occupancy May 1. All the penthouses start at $20,000, up to $23,500 monthly. We’re already getting a lot of activity on them. And the hotel’s doing well; it’s exceeding our expectations.

Q Why rentals and not condos?

A We cut our teeth on rentals. In the ’60s and the ’70s, we built probably 60- or 70-plus rental projects. The rentals are scattered all over Manhattan. Our recent history was condominiums — we had three or four projects that were a function of the times.

It’s hard to put your heart and soul into something where at the end of the day you don’t have a tangible asset anymore.

Q Would you ever consider converting the Beatrice, if, say the market soared again?

A I hope not. I’d be lying to you if I told you I haven’t been asked that before. We have several rental buildings that have gone through four or five real estate booms, but we like rentals.

Q What’s your assessment of the New York market now?

A In the long-term perspective we’re very bullish, but you’re going to have short-term challenges — whether they be economic, political or availability. There are still tremendous opportunities here, and we’re seeking them out.

Q Do you have any other projects in the works?

A We do have three or four projects that we’re excited about. Unfortunately, we can’t talk about them because we’re under confidentiality agreements.

They’re going to be some rental, some condo; three are ground-up and one is a gut renovation. We’re looking at a couple in the outer boroughs at this point in time, and certainly in Manhattan.

Q So why doesn’t J.D. Carlisle have a Web site?

A We get asked that a lot. We’re low-profile people; we don’t usually have to advertise who we are.

Q You knew at an early age that you wanted to be involved in real estate, didn’t you?

A Yes, because my hero was my grandfather, who founded this business — my maternal grandfather, Beatrice’s husband.

He has been my hero since the minute I could understand who he was, and I would have done anything to be with him — to be him. When I was graduating from college, he asked if I would consider coming to work with him. I jumped at the opportunity and 17, 18 years later, here’s where we are. He’s since retired.

Q What was your first job there?

A I went to school for accounting so I started off computerizing their accounting systems, and I got bored very, very quickly. I made the request for an assistant superintendent’s job. I went to work with a hard hat climbing into the demolition. Just being on a construction site every single day helps me to understand how things wind up working, all the nuances that you need to understand.

Q Do you live in any of your buildings?

A I live in Morton Square. One of the advantages of developing is you get a good price.

View the original article here

Square Feet: Projects Shelved in the Downturn Spring Back to Life

The developer spent the last several years studying the engineering of a deck over the rail yards on the site, and says it has found a way to build it cheaper and quicker. It will start construction later this year, with plans to deliver a two-million-square-foot office tower designed by Skidmore, Owings & Merrill on the northeast corner of the parcel by 2015. There are plans to eventually construct as many as three towers.

“We will start building the deck on spec but are confident that by the time we get around to building the tower, we will have found an anchor tenant,” said Ric Clark, the president and chief executive. While he declined to give asking rents for the tower, Brookfield has begun preliminary conversations with tenants and expects to be competitively priced with the Hudson Yards buildings the Related Companies is planning a few blocks west.

As rents rebound and vacancies fall in the New York office market, some developers like Mr. Clark who shelved projects in the recession are resurrecting their plans. Several buildings are in the pipeline, and nearly 9.5 million square feet could become available over the next few years — in addition to several million more square feet at the World Trade Center in Lower Manhattan and the Hudson Yards.

A number of factors are driving the trend. Commercial rents are rising in certain submarkets and have held steady in others. Builders who believe the market has turned are preparing sites now in the hopes their projects will come online when higher rents are firmly established.

The city’s aging office stock is another factor. Nearly 83 percent of the office buildings in Manhattan were built more than three decades ago, according to the real estate company Cassidy Turley, and just 6.6 percent have been built since 1990. Many tenants, particularly law firms and financial services companies, crave new space that can be more efficient and tailored to their needs. Finally, construction costs could fall as union contracts begin expiring over the next few months and contractors push to exclude costly labor rules.

“A year ago people were saying the market was so bad they wouldn’t contemplate ground-up construction,” said John F. Powers, the chairman of the New York tri-state region for CB Richard Ellis. “But now, there is upward pressure on rents in some segments of the market, and certainly there is no more downward pressure, so developers are beginning to run pro formas again,” he said, referring to the method of estimating a project’s cost.

In the first quarter of this year there were 15 office leases in Midtown at rents above $90 a square foot, compared with 23 for all of 2010, according to Cushman & Wakefield. At the same time the vacancy rate in Midtown has dropped to 10.3 percent, compared with 12.6 percent at this time last year.

Tenants considering locking in new space now, before rents rise further, include Time Warner Inc., the financial services behemoth UBS and the law firm Mayer Brown. According to Cassidy Turley there are 446 tenants in the market chasing less than 28 million square feet of space.

Particularly well-poised are those developers who had begun preparing before the recession and can resume construction now at points further along. Pacolet Milliken Enterprises, the sister company of the textile firm Milliken & Company, demolished the building at 1045 Avenue of the Americas, a full block between West 39th and West 40th Streets, in 2009. The company has completed the schematic design for a 350,000-square-foot office building at the now-vacant lot, and has hired the Houston-based real estate firm Hines as a consultant.

“We feel very confident about the market and the location,” said Richard C. Webel, Pacolet Milliken’s president. He said the company had been speaking preliminarily with tenants, though it had not yet hired a broker. As for timing, “based on who we have talked to, the market should be there by 2015 or 2016, if not sooner,” Mr. Webel said.

Timing is critical as the market starts to revive, experts said. “The first buildings to be up and running will be most successful in grabbing an anchor tenant,” said Robert Sammons, the vice president for research services at Cassidy Turley.

Boston Properties is banking on this as it revives construction on a 1-million-square-foot office tower at 250 West 55th Street; building stopped in 2008 after the foundation was poured. Since it is partially built, it will be a relatively short time — mid-2014 — until Boston Properties can deliver the building to tenants. Already, it is in lease negotiations with the law firm Morrison Foerster as an anchor tenant.

View the original article here

Square Feet: Government, Too, Has Trouble Selling Buildings

But the federal government did not put the building on the market until November 2009. By then, of course, the real estate market had slumped. Akridge and its partner, Rockwood Capital, a real estate investment fund in White Plains, finally bought the building last October, paying $12.5 million, less than the $14 million asking price.

In a report last October Republicans in Congress pounced on the long delay in selling the Bethesda building — and the discounted price — as an example of how the federal government has been mismanaging its real estate holdings.

The government owns or manages more than 900,000 buildings or other structures across the country — office buildings, courthouses, warehouses and other property types — making it the nation’s largest landlord. But like the former N.I.H. building, about 14,000 are no longer needed and are costly to maintain. An additional 55,000 are regarded as underutilized.

The report was also harshly critical of government spending to operate surplus and underused buildings, including $6.5 million for the Old Post Office Building at 12th Street and Pennsylvania Avenue in Washington. The administration’s own figures estimate the annual operating expenses for those buildings at more than $1.8 billion.

Last June President Obama ordered executive agencies to accelerate efforts to dispose of unneeded buildings, and set a goal of saving $3 billion by the end of 2012. Yet various obstacles make it difficult for the government to unload buildings it no longer wants.

For one thing they must first be offered to other federal, state and local agencies. Officials also have to ascertain if the building has a community use — say, for a homeless shelter.

At times an agency may want to sell an obsolete building but cannot afford the moving costs, Jeffrey D. Zients, a deputy director of the Office of Management and Budget, said in a telephone interview. Then, too, political considerations may come into play. “Politicians love to come hold a ribbon-cutting for a new building,” Mr. Zients said. “Getting rid of a building is less rewarding.”

The Obama administration has determined that if the barriers to selling were removed, he said, the savings could be much higher — $15 billion over five years. The sum includes the dollars not spent on maintenance and energy costs as well as sale proceeds.

To speed up the disposal process the administration wants to create an independent commission modeled after the Base Realignment and Closure Commission, or BRAC, a process begun in 1988 to review Defense Department recommendations for closing military bases. The proposed commission, the Civilian Property Realignment Board, would be able to cut through much of the existing red tape, establish new procedures and come up with recommendations for selling property in bulk, Mr. Zients said.

The commission would also recommend ways the government could use its space more efficiently by, for example, consolidating space or getting agencies to move into one building.

In addition, the legislation is expected to provide incentives for federal agencies by allowing them to share in the proceeds from any sales. To reduce political influence, the commission’s recommendations would be submitted to Congress as a package and not subject to amendment — similar to the way the base closure recommendations were handled. Daniel Werfel, the controller for the Office of Management and Budget, said the commission would include people with experience in commercial real estate, government operations and community development.

The commission concept has bipartisan support, said Jeff Denham, Republican of California and the chairman of the House subcommittee on public buildings. “The goal in the short term is to sell as many buildings as possible to generate some immediate cash flow to help with the debt crisis,” said Mr. Denham, who backed a similar proposal when he was a state legislator. The longer-term goal is to improve the way the federal government handles its real estate needs, he said.

Some real estate experts wondered if a board was necessary. “Whenever government is faced with a problem, the first thing they do is appoint a commission,” said Nicholas R. Smith, an executive vice president at First Potomac Realty Trust, a publicly traded company that leases more than 700,000 square feet to the government. Mr. Smith said the process for selling federal property should simply be made less complex.

This article has been revised to reflect the following correction:

Correction: April 28, 2011

An article in the Square Feet pages on Wednesday about the federal government’s difficulty in divesting some of its real estate holdings misspelled the name of a deputy director in the Office of Management and Budget. He is Jeffrey D. Zients, not Jeffrey D. Zeints.

View the original article here

Square Feet: Projects Shelved in the Downturn Spring Back to Life

The developer spent the last several years studying the engineering of a deck over the rail yards on the site, and says it has found a way to build it cheaper and quicker. It will start construction later this year, with plans to deliver a two-million-square-foot office tower designed by Skidmore, Owings & Merrill on the northeast corner of the parcel by 2015. There are plans to eventually construct as many as three towers.

“We will start building the deck on spec but are confident that by the time we get around to building the tower, we will have found an anchor tenant,” said Ric Clark, the president and chief executive. While he declined to give asking rents for the tower, Brookfield has begun preliminary conversations with tenants and expects to be competitively priced with the Hudson Yards buildings the Related Companies is planning a few blocks west.

As rents rebound and vacancies fall in the New York office market, some developers like Mr. Clark who shelved projects in the recession are resurrecting their plans. Several buildings are in the pipeline, and nearly 9.5 million square feet could become available over the next few years — in addition to several million more square feet at the World Trade Center in Lower Manhattan and the Hudson Yards.

A number of factors are driving the trend. Commercial rents are rising in certain submarkets and have held steady in others. Builders who believe the market has turned are preparing sites now in the hopes their projects will come online when higher rents are firmly established.

The city’s aging office stock is another factor. Nearly 83 percent of the office buildings in Manhattan were built more than three decades ago, according to the real estate company Cassidy Turley, and just 6.6 percent have been built since 1990. Many tenants, particularly law firms and financial services companies, crave new space that can be more efficient and tailored to their needs. Finally, construction costs could fall as union contracts begin expiring over the next few months and contractors push to exclude costly labor rules.

“A year ago people were saying the market was so bad they wouldn’t contemplate ground-up construction,” said John F. Powers, the chairman of the New York tri-state region for CB Richard Ellis. “But now, there is upward pressure on rents in some segments of the market, and certainly there is no more downward pressure, so developers are beginning to run pro formas again,” he said, referring to the method of estimating a project’s cost.

In the first quarter of this year there were 15 office leases in Midtown at rents above $90 a square foot, compared with 23 for all of 2010, according to Cushman & Wakefield. At the same time the vacancy rate in Midtown has dropped to 10.3 percent, compared with 12.6 percent at this time last year.

Tenants considering locking in new space now, before rents rise further, include Time Warner Inc., the financial services behemoth UBS and the law firm Mayer Brown. According to Cassidy Turley there are 446 tenants in the market chasing less than 28 million square feet of space.

Particularly well-poised are those developers who had begun preparing before the recession and can resume construction now at points further along. Pacolet Milliken Enterprises, the sister company of the textile firm Milliken & Company, demolished the building at 1045 Avenue of the Americas, a full block between West 39th and West 40th Streets, in 2009. The company has completed the schematic design for a 350,000-square-foot office building at the now-vacant lot, and has hired the Houston-based real estate firm Hines as a consultant.

“We feel very confident about the market and the location,” said Richard C. Webel, Pacolet Milliken’s president. He said the company had been speaking preliminarily with tenants, though it had not yet hired a broker. As for timing, “based on who we have talked to, the market should be there by 2015 or 2016, if not sooner,” Mr. Webel said.

Timing is critical as the market starts to revive, experts said. “The first buildings to be up and running will be most successful in grabbing an anchor tenant,” said Robert Sammons, the vice president for research services at Cassidy Turley.

Boston Properties is banking on this as it revives construction on a 1-million-square-foot office tower at 250 West 55th Street; building stopped in 2008 after the foundation was poured. Since it is partially built, it will be a relatively short time — mid-2014 — until Boston Properties can deliver the building to tenants. Already, it is in lease negotiations with the law firm Morrison Foerster as an anchor tenant.

View the original article here

Square Feet: Projects Shelved in the Downturn Spring Back to Life

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View the original article here

Square Feet: Government, Too, Has Trouble Selling Buildings

But the federal government did not put the building on the market until November 2009. By then, of course, the real estate market had slumped. Akridge and its partner, Rockwood Capital, a real estate investment fund in White Plains, finally bought the building last October, paying $12.5 million, less than the $14 million asking price.

In a report last October Republicans in Congress pounced on the long delay in selling the Bethesda building — and the discounted price — as an example of how the federal government has been mismanaging its real estate holdings.

The government owns or manages more than 900,000 buildings or other structures across the country — office buildings, courthouses, warehouses and other property types — making it the nation’s largest landlord. But like the former N.I.H. building, about 14,000 are no longer needed and are costly to maintain. An additional 55,000 are regarded as underutilized.

The report was also harshly critical of government spending to operate surplus and underused buildings, including $6.5 million for the Old Post Office Building at 12th Street and Pennsylvania Avenue in Washington. The administration’s own figures estimate the annual operating expenses for those buildings at more than $1.8 billion.

Last June President Obama ordered executive agencies to accelerate efforts to dispose of unneeded buildings, and set a goal of saving $3 billion by the end of 2012. Yet various obstacles make it difficult for the government to unload buildings it no longer wants.

For one thing they must first be offered to other federal, state and local agencies. Officials also have to ascertain if the building has a community use — say, for a homeless shelter.

At times an agency may want to sell an obsolete building but cannot afford the moving costs, Jeffrey D. Zeints, a deputy director of the Office of Management and Budget, said in a telephone interview. Then, too, political considerations may come into play. “Politicians love to come hold a ribbon-cutting for a new building,” Mr. Zeints said. “Getting rid of a building is less rewarding.”

The Obama administration has determined that if the barriers to selling were removed, he said, the savings could be much higher — $15 billion over five years. The sum includes the dollars not spent on maintenance and energy costs as well as sale proceeds.

To speed up the disposal process the administration wants to create an independent commission modeled after the Base Realignment and Closure Commission, or BRAC, a process begun in 1988 to review Defense Department recommendations for closing military bases. The proposed commission, the Civilian Property Realignment Board, would be able to cut through much of the existing red tape, establish new procedures and come up with recommendations for selling property in bulk, Mr. Zeints said.

The commission would also recommend ways the government could use its space more efficiently by, for example, consolidating space or getting agencies to move into one building.

In addition, the legislation is expected to provide incentives for federal agencies by allowing them to share in the proceeds from any sales. To reduce political influence, the commission’s recommendations would be submitted to Congress as a package and not subject to amendment — similar to the way the base closure recommendations were handled. Daniel Werfel, the controller for the Office of Management and Budget, said the commission would include people with experience in commercial real estate, government operations and community development.

The commission concept has bipartisan support, said Jeff Denham, Republican of California and the chairman of the House subcommittee on public buildings. “The goal in the short term is to sell as many buildings as possible to generate some immediate cash flow to help with the debt crisis,” said Mr. Denham, who backed a similar proposal when he was a state legislator. The longer-term goal is to improve the way the federal government handles its real estate needs, he said.

Some real estate experts wondered if a board was necessary. “Whenever government is faced with a problem, the first thing they do is appoint a commission,” said Nicholas R. Smith, an executive vice president at First Potomac Realty Trust, a publicly traded company that leases more than 700,000 square feet to the government. Mr. Smith said the process for selling federal property should simply be made less complex.

Jeffrey D. DeBoer, the chief executive of the Real Estate Roundtable, a Washington trade group that represents industry leaders, described the proposed board as a “positive idea.” But he urged the government to restrict its sales efforts for now to stronger markets with relatively low office vacancy rates, like Manhattan, the Back Bay area of Boston, Washington, San Francisco and the West Side of Los Angeles.

View the original article here

Square Feet: Rebuilding Downtown From the Ground Up

The city has approved plans to raze most of its 50-acre center and replace it with $289 million in new infrastructure and $1.3 billion of new private housing, retail, offices, entertainment, hotels and parking. The private builder, Street-Works Development of White Plains, will pay for the public improvements upfront.

Once Street-Works installs the utilities, roadways, parking and landscaping; builds a number of new buildings and leases 50 to 75 percent of the space, the city will assume responsibility for the infrastructure bill by selling general obligations bonds. Some income from the property will flow to the city to cover interest on the debt, amortize the principal and generate extra money for city coffers.

“We couldn’t afford to do this on our own, this quickly,” Mayor Thomas P. Koch said. But after 30 years of wanting to revitalize a downtown drained of businesses, shopping and housing by outlying neighborhoods, he said, “we’ve established a relationship of trust with Street-Works.” In 2005 the developer started planning what is to be called New Quincy Center. In January it signed a master agreement with the city to codify the plan and set milestones it must meet before Quincy floats the bonds.

This is a reversal of the traditional urban development model, in which municipalities pay for public improvements before the private sector starts construction. And it could be a template in an era when state and federal agencies are retreating from ambitious redevelopment projects.

“In the 21st century, innovative mayors will have to redefine development rules, and it’s commendable that this mayor is willing to take the risk,” said Thomas Murphy, a senior fellow at the Urban Land Institute and a former mayor of Pittsburgh. “If Quincy succeeds, it’s a game changer.”

But the consequences of failure can be significant. In downtown Boston, for instance, there is a gaping block-size hole where Vornado Realty Trust and Gale International halted construction of a large mixed-use project, One Franklin.

“The bigger projects are, the more difficult and fragile they are,” said George J. Fantini Jr., the chairman of Fantini & Gorga, a commercial real estate mortgage broker based in Boston. “For a project to succeed, each building has to be feasible in its own right.”

Ken Narva, a partner in Street-Works, said the risk in Quincy was minimized by the city’s easy access to mass transit, the broad scope of the project, a strong local economy and the lack of a vital urban center elsewhere on the South Shore. “We’re building a new neighborhood, not a project,” he said.

The plan is to build, in increments, 3.5 million square feet of new space: 1,200 rental and condominium apartments, 625,000 square feet of retail, two hotels and entertainment; 1.5 million square feet of offices for higher education, health care, professionals and businesses; and parking for 5,500 vehicles.

Ten years of construction will start mid-2012, first on the infrastructure and then in mid-2013 on the buildings. The first group of buildings, 1.3 million square feet valued at about $700 million, will include approximately 300 apartments, 325,000 square feet for retailers, 350,000 square feet of offices, a hotel and parking for about 2,000 cars.

Before construction starts, Street-Works estimates it will have spent $50 million of its own funds, as well as money raised from Quincy Mutual Fire Insurance Company, Ronus Properties of Atlanta and others. For construction financing the developer plans to take the city bond guarantee and its signed leases to the private equity and debt markets for institutional and traditional loans, Mr. Narva said. He and his partner, Richard Heapes, are talking to potential joint venture partners to develop at least 12 of the 25 new buildings with financing they raise themselves.

“The underlying premise is that Quincy is a great location,” Mr. Narva said. “Its mass transit is a main driver of value creation.” Quincy Center has a Red Line subway stop, six stops from downtown Boston and 10 from Cambridge. The city is on a main highway, Interstate 93, and has 27 miles of waterfront. “The developer is here because of the T stop,” said Mayor Koch, referring to the transit system, who said he was impressed when he visited Street-Works’ Blue Back Square project in West Hartford, Conn. He said he hoped to secure another $50 million in state and federal grants for infrastructure work.

New Quincy Center will offer what many empty nesters and young workers say they prefer: a walkable, urban place to live, work and play. But this type of overhaul would not succeed everywhere, said Gregory Bialecki, the state secretary of housing and economic development.

It may work here because Quincy is willing to make a big financial commitment; the developer has a long-term plan with the flexibility to survive a few market cycles; and since the fall of 2009 the regional South Shore economy has performed well, creating jobs in sectors that are driving the overall state economy like health care, higher education and financial services. Further, Mr. Bialecki said, “that everyone has skin in the game from the start is a strong sign it will work.”

Whether it does, “rests on how much space Quincy can absorb” said Gleb Nechayev, an economist with CBRE Econometric Advisors. Because Quincy added 6.8 percent more housing units and 4.8 percent more residents from 2000 to 2010, he said, “the project has a good chance of success.”

By mid-2013, the Quincy region is expected to return to peak employment, with the jobless rate dipping below 7 percent for the first time since early 2009, said Michael Lynch, an economist at IHS Global Insight. “By the time buildings come online, the economy will be in much better shape to handle them,” he said.

By early next year Street-Works hopes to have letters of intent for a cinema; at least 300,000 square feet of offices for education, health care and businesses; and 100,000 square feet of large format retailing, Mr. Narva said.

If the plan fails, Mayor Koch said, “the city walks away with more than it had five years ago.”

If it succeeds, Mr. Narva said, “we’ll feel good about creating a great urban place and make a lot of money.”

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Square Feet | The 30-Minute Interview: Michael E. Shields

Mr. Shields, 43, is the managing director of ING Real Estate Finance (U.S.A.), which has a $6.7 billion portfolio of term loans, construction loans and subordinate debt.

ING Real Estate Finance is part of the ING Group of the Netherlands, which provides banking, investment, life insurance and retirement services worldwide.

Q What are your duties at ING?

A We’re primarily focused on first mortgage originations of commercial real estate’s four major food groups: office, retail, residential and industrial. We’re like a little company within ING. I run the group, and that pretty much means everything from new deal originations to approving transactions.

Q Are you doing many debt restructurings?

A Last year we restructured almost $1.6 billion of our existing portfolio, and that was about 17 transactions. They were just deals with issues. In 2009 it was very difficult to get a restructuring done; the client really didn’t know where value was, so you couldn’t get a meeting of the minds for how the restructuring should go.

This year we’ve done about three, and I think we’ll probably end up doing about nine deals, or $800 million to $900 million.

Q Does this drop in deals indicate things are getting better, or that you’ve gotten most of the restructurings out of the way?

A I think it’s both. We’ve gotten through the bulk of it, and last year we started originating new transactions. This year we’re fully in the origination mode.

Q What are your projections for loan originations?

A Last year nationwide we did about $650 million of new originations — brand-new deals — and this year we’ve already closed about $250 million. We expect to be over $1 billion in originations. It’ll just depend on what we see from our key clients.

Right after Lehman Brothers went down, the new-deal flow stopped; we closed two transactions post Lehman.

Q So credit is becoming more available now?

A To strong, creditworthy sponsors on high-quality assets in good markets, it’s available. For smaller sponsors in smaller markets it’s still not that easy.

Q How much equity are you asking borrowers to put in?

A Our loan-to-value ratios have been 60 to 70 percent, so 30 to 40 percent equity. It’s pretty high. Last year we were probably looking at deals in the 55 percent L.T.V. range, so it’s gotten a little more aggressive.

Q Do you work with other lenders on your deals?

A Yes. We’re syndicating some loans to different smaller institutions. On the banking side the hold levels have come down post crisis.

Q Let’s move on to the New York market.

A We’ve been very active in the market. I’d say about 15 percent of our portfolio is here — in Midtown Manhattan.

In the existing portfolio, some situations that we thought were going to be difficult have ended up working out pretty nicely, so we haven’t had a lot of major issues here.

Q You hold the loan for 610 Lexington, on which a Shangri-La Hotel and condominium was proposed. What’s happening there?

A We’re in the process of foreclosing on it. That’s one of the transactions that have been more problematic for us.

Q And what will happen to the property afterward?

A We’re still examining all of our options; there are a lot of things we can do. That site is very high-profile and we’re getting a lot of inquiries from everyone — every major player.

Q Does ING hold much real estate as a result of foreclosures?

A There’s a small loan that was done out of Amsterdam — it’s a land loan — in Annapolis, Md., and it’s pretty small. But that’s it. We really haven’t had to foreclose on a lot of assets; this is the only one. We don’t have a problem owning an asset, but preferably we like to just make loans and not own the assets.

Q There have been a lot of changes within ING, including the recent sale of its real estate investment-management division and the management buyout of ING Clarion. Will this affect your division?

A It’s really not going to have any effect on our business going forward.

Q ING is a title sponsor of the New York City Marathon. Have you had a chance to run that race?

A I am scheduled to run the marathon this year. This would be my first time, my first marathon. This might be the last time that ING sponsors it; who knows?

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Square Feet: A New South City Looks to a Future Not Built on Banking

Bank of America’s 50-story headquarters, Charlotte’s tallest building when it was completed in 1993, was to be joined by a similarly sized home for Wachovia.

But the economic convulsions of late 2008 intervened. Almost overnight, Wachovia became a subsidiary of Wells Fargo, based in San Francisco. Its unfinished tower, including three museums and a theater at its base, was briefly christened the Wells Fargo Cultural Center.

Wells Fargo then negotiated a deal with Duke Energy to give the utility about 500,000 square feet of space on 21 floors in the building, which was finished last year and is now known as the Duke Energy Center. The lease, and the construction of two other new buildings in the city’s central business district, known as Uptown, point to a more diversified future for the city.

One of the other tenants in the tower is Cassidy Turley, the city’s fourth-largest property management firm. Maxwell Hanks, a senior vice president, said Charlotte has had to adjust to a new array of realities: a 13.5 percent office vacancy rate, nearly three million square feet of vacant space and a banking-based economy that was diversifying rapidly into military and energy.

“I find myself in the psychology business these days — of managing expectations for both landlords and tenants,” Mr. Hanks said in his office on the 34th floor. “The market has changed. There’s more supply, weaker demand and greater vacancy. But there are more concessions too.”

The Duke Energy Center — or the Tower of Power as some call it — has 1.3 million square feet over 48 stories and is now 97 percent occupied. The Duke name has transformed it into a symbol not only of Charlotte’s ability to weather a severe financial downturn, but also of a regional economy that is moving beyond banking and into other industries.

“The city fathers took a body blow in 2008,” said Tom Shiel, the communications manager of Duke Energy. “They took an eight count, then asked what they could do to prevent that from ever happening again.”

They began by focusing on industry sectors that had been recruited in previous years and were growing, like military contracting and aerospace. One contractor, Goodrich, had established its headquarters in Charlotte in 1999, while General Dynamics, which is based in Virginia, moved executive offices for its armament and technical products division here in 2004. Last year, BAE Systems of Britain, whose United States unit is based in Arlington, Va., committed to opening a human resources and finance center in Charlotte, creating 176 jobs.

Also on their radar screen was the energy sector. Already, the Shaw Group and Areva were among about 50 such companies clustered in and around the city. Then last June, Babcock & Wilcox, the energy engineering company based in Lynchburg, Va., moved its headquarters and 130 jobs here. More significantly Duke Energy is now poised to lay claim to the title of the nation’s largest electric utility, pending approval of its $13.7 billion acquisition, not including debt, of Progress Energy of Raleigh, N.C. Recently, Duke’s chief executive, James E. Rogers, told The Financial Times that the deal would put the company in a stronger position for further consolidation.

“Usually when you go to a major city, all the tall buildings are the banks,” said Clark Gillespy, vice president of economic development at Duke Energy. “I’ve never been to a city where it’s the energy company. Here, it’s because Rogers has driven a stake in the ground and said it’s the energy sector that’s going to lead us out of this recession.”

That may take a while. Vacancy rates have been steadily increasing since a low of 2.5 percent in 2008, rising this year by almost a full percentage point over 2010’s rate of 12.7 percent. The last time Charlotte was bumping this long and low across the bottom was 1993. Then, two bank chief executives, Hugh McColl of NationsBank and Edward E. Crutchfield of First Union, set out on a nationwide tear of acquisitions that eventually formed Bank of America and Wachovia, respectively the nation’s largest and fourth-largest banks. “They really got traction back then,” Mr. Hanks said. “It took about 24 months from that downturn to get back to single digits.”

But in 1993, Uptown Charlotte consisted of just 10 million square feet of commercial space. In 2011, it covers 22 million, much of that available because banks are giving up third-party space and heading back to buildings they own. That leaves a lot of empty offices — about 2.8 million square feet — much of it Class A space.

Mr. Hanks said the Duke Energy Center was one of two new buildings he would characterize as “Super-A” space — because it was LEED platinum certified by the United States Green Building Council and dominated the city skyline. The other is the recently completed 32-story Bank of America Center, now 95 percent under lease. Nearby is the new Nascar Plaza office tower, with 230,000 of its total 390,000 square feet available — all of it Class A space and much of it contiguous.

Effective leasing rates are estimated at 15 to 25 percent lower than they were four years ago. The remaining Super-A space — a little under 100,000 square feet between the two high-rises — can be had for $28 to $34 a square foot, Mr. Hanks said. The Uptown area has 1.6 million square feet of Class A space commanding $23 to $28 a square foot, and 1.1 million square feet of Class B space that runs $18 to $23 a square foot.

Charlotte’s changes will be on display to the world in September 2012, when the Democratic Party holds its convention here. It is expected to bring in 35,000 visitors and generate $150 million.

Mr. Hanks predicted that companies would like what they saw during the convention. “It will be enticing for a top-tier company to come in and reboot in a New South city,” he said. “With the convention in 2012, companies will come in, like it and stay.”

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Square Feet |The 30-Minute Interview: Glenn J. Rufrano

Mr. Rufrano, who was previously the chief executive of the Centro Properties Group of Australia, took the helm of Cushman and Wakefield on March 22, 2010, replacing Bruce E. Mosler, who is now the chairman of global brokerage.

Q How was your first year as C.E.O.?

A It certainly has been intellectually challenging. I’ve had to understand the breadth of Cushman and Wakefield — which is 13,000 people in 60 countries and 230 offices. So getting into and understanding each of the regional businesses and then the major offices and how they perform services has taken some time this year. I think I’m there.

The first day here, I put out a memo outlining what I’d be doing for the next 90 days. The first 30 I would spend in New York understanding all the financials and the global clientele. Then I outlined my trips for the next 30 days. In the last 30 days I would correlate what I found in the field and prepare a strategic plan. But actually I only spent two weeks here and six in the field.

Q Did Bruce help you?

A He helped me initially understand the structure of the company, personalities of the people, and how business opportunities shaped themselves.

Bruce has such good history at the company, and quite often we’ll talk about the business and what I think I know and what is really happening. As you know, I don’t come from the brokerage business. I had no problem as a C.E.O. coming in with the ex-C.E.O. being in a different position, which is highly unusual; in most companies they’re gone. So I think of this as we’re partners.

Q There’s been talk within the industry that you were brought in to burnish the company so it could eventually be sold off.

A The reason I was brought in — and what my tour is — is to maximize the value of Cushman and Wakefield. It is really as simple as that. Exor has no plans to sell Cushman and Wakefield.

Q Have there been many merger or acquisition overtures?

A There has been over the years. It did eventually sell in ’07 to Exor. Their M.O. is to buy businesses and hold them long term. At some point Exor may want to reduce their position in Cushman. They own 73 percent; the employees own the rest.

Q A number of your key employees, though, have left.

A In New York there have been two groups that have left for Jones Lang LaSalle: our capital markets group, and then our leasing group, more recently. They were fine people, but at times you agree to disagree. On a global basis we’ve added people.

Q Last week, Exor released its financial results for 2010, which showed that Cushman and Wakefield earned $25.7 million on $1.8 billion in revenue, versus a $115.8 million loss in ’09.

A Cushman reduced expenses nicely — kept them down in ’08, ’09 and going into 2010. Then the wind shifted; 2010 was a very good year for revenue. We had a good last half of the year, driven by capital markets and leasing, though every one of our five business lines had increases for the year. In 2008 and 2009 we let go about 17 or 18 percent of our work force. We are building back up.

Q Let’s talk about business in the New York market.

A Leasing activity over all is up 61.9 percent over this time last year. One reason New York City has done so well is because it did not lose as many jobs as people expected. We’ve recovered 43 percent of the jobs that we lost since the end of ’09. Nationally, we recovered 14.5 percent. Our capital markets group had a very fair year. We had a number of transactions in the $40 million-to-$100 million range.

The asking rental rates for a Class A building in Midtown averaged $66.25 a square foot in the first quarter, up 21 percent from a year ago but 47 percent below the ’08 first quarter.

Q Is there more foreign interest?

A There’s clearly more capital from off shore that would like to invest in New York. A group called Afire — the Association of Foreign Investors in Real Estate — identified the five locations around the globe that they wanted to invest in. New York was No. 1, followed by Washington, London, Paris and Tokyo. What do they want to own? These office buildings, and they will pay high prices for them.

Q Speaking of big office buildings, Cushman is part of the leasing team for One World Trade Center. What’s the status?

A The building is well positioned for large-space users. There’s a commitment for 200,000 square feet from Beijing Vantone, and the other major tenant that’s announced but hasn’t signed yet is Condé Nast.

This article has been revised to reflect the following correction:

Correction: April 10, 2011

The 30-Minute Interview last Sunday about Glenn J. Rufrano, the chief executive of Cushman and Wakefield, misstated the amount of space leased by Beijing Vantone at One World Trade Center. It is 200,000 square feet, not 1.25 million square feet, which represents the total amount committed to by Beijing Vantone and another prospective tenant, Condé Nast.

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Square Feet: Government, Too, Has Trouble Selling Buildings

But the federal government did not put the building on the market until November 2009. By then, of course, the real estate market had slumped. Akridge and its partner, Rockwood Capital, a real estate investment fund in White Plains, finally bought the building last October, paying $12.5 million, less than the $14 million asking price.

In a report last October Republicans in Congress pounced on the long delay in selling the Bethesda building — and the discounted price — as an example of how the federal government has been mismanaging its real estate holdings.

The government owns or manages more than 900,000 buildings or other structures across the country — office buildings, courthouses, warehouses and other property types — making it the nation’s largest landlord. But like the former N.I.H. building, about 14,000 are no longer needed and are costly to maintain. An additional 55,000 are regarded as underutilized.

The report was also harshly critical of government spending to operate surplus and underused buildings, including $6.5 million for the Old Post Office Building at 12th Street and Pennsylvania Avenue in Washington. The administration’s own figures estimate the annual operating expenses for those buildings at more than $1.8 billion.

Last June President Obama ordered executive agencies to accelerate efforts to dispose of unneeded buildings, and set a goal of saving $3 billion by the end of 2012. Yet various obstacles make it difficult for the government to unload buildings it no longer wants.

For one thing they must first be offered to other federal, state and local agencies. Officials also have to ascertain if the building has a community use — say, for a homeless shelter.

At times an agency may want to sell an obsolete building but cannot afford the moving costs, Jeffrey D. Zeints, a deputy director of the Office of Management and Budget, said in a telephone interview. Then, too, political considerations may come into play. “Politicians love to come hold a ribbon-cutting for a new building,” Mr. Zeints said. “Getting rid of a building is less rewarding.”

The Obama administration has determined that if the barriers to selling were removed, he said, the savings could be much higher — $15 billion over five years. The sum includes the dollars not spent on maintenance and energy costs as well as sale proceeds.

To speed up the disposal process the administration wants to create an independent commission modeled after the Base Realignment and Closure Commission, or BRAC, a process begun in 1988 to review Defense Department recommendations for closing military bases. The proposed commission, the Civilian Property Realignment Board, would be able to cut through much of the existing red tape, establish new procedures and come up with recommendations for selling property in bulk, Mr. Zeints said.

The commission would also recommend ways the government could use its space more efficiently by, for example, consolidating space or getting agencies to move into one building.

In addition, the legislation is expected to provide incentives for federal agencies by allowing them to share in the proceeds from any sales. To reduce political influence, the commission’s recommendations would be submitted to Congress as a package and not subject to amendment — similar to the way the base closure recommendations were handled. Daniel Werfel, the controller for the Office of Management and Budget, said the commission would include people with experience in commercial real estate, government operations and community development.

The commission concept has bipartisan support, said Jeff Denham, Republican of California and the chairman of the House subcommittee on public buildings. “The goal in the short term is to sell as many buildings as possible to generate some immediate cash flow to help with the debt crisis,” said Mr. Denham, who backed a similar proposal when he was a state legislator. The longer-term goal is to improve the way the federal government handles its real estate needs, he said.

Some real estate experts wondered if a board was necessary. “Whenever government is faced with a problem, the first thing they do is appoint a commission,” said Nicholas R. Smith, an executive vice president at First Potomac Realty Trust, a publicly traded company that leases more than 700,000 square feet to the government. Mr. Smith said the process for selling federal property should simply be made less complex.

Jeffrey D. DeBoer, the chief executive of the Real Estate Roundtable, a Washington trade group that represents industry leaders, described the proposed board as a “positive idea.” But he urged the government to restrict its sales efforts for now to stronger markets with relatively low office vacancy rates, like Manhattan, the Back Bay area of Boston, Washington, San Francisco and the West Side of Los Angeles.

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Square Feet: Projects Shelved in the Downturn Spring Back to Life

The developer spent the last several years studying the engineering of a deck over the rail yards on the site, and says it has found a way to build it cheaper and quicker. It will start construction later this year, with plans to deliver a two-million-square-foot office tower designed by Skidmore, Owings & Merrill on the northeast corner of the parcel by 2015. There are plans to eventually construct as many as three towers.

“We will start building the deck on spec but are confident that by the time we get around to building the tower, we will have found an anchor tenant,” said Ric Clark, the president and chief executive. While he declined to give asking rents for the tower, Brookfield has begun preliminary conversations with tenants and expects to be competitively priced with the Hudson Yards buildings the Related Companies is planning a few blocks west.

As rents rebound and vacancies fall in the New York office market, some developers like Mr. Clark who shelved projects in the recession are resurrecting their plans. Several buildings are in the pipeline, and nearly 9.5 million square feet could become available over the next few years — in addition to several million more square feet at the World Trade Center in Lower Manhattan and the Hudson Yards.

A number of factors are driving the trend. Commercial rents are rising in certain submarkets and have held steady in others. Builders who believe the market has turned are preparing sites now in the hopes their projects will come online when higher rents are firmly established.

The city’s aging office stock is another factor. Nearly 83 percent of the office buildings in Manhattan were built more than three decades ago, according to the real estate company Cassidy Turley, and just 6.6 percent have been built since 1990. Many tenants, particularly law firms and financial services companies, crave new space that can be more efficient and tailored to their needs. Finally, construction costs could fall as union contracts begin expiring over the next few months and contractors push to exclude costly labor rules.

“A year ago people were saying the market was so bad they wouldn’t contemplate ground-up construction,” said John F. Powers, the chairman of the New York tri-state region for CB Richard Ellis. “But now, there is upward pressure on rents in some segments of the market, and certainly there is no more downward pressure, so developers are beginning to run pro formas again,” he said, referring to the method of estimating a project’s cost.

In the first quarter of this year there were 15 office leases in Midtown at rents above $90 a square foot, compared with 23 for all of 2010, according to Cushman & Wakefield. At the same time the vacancy rate in Midtown has dropped to 10.3 percent, compared with 12.6 percent at this time last year.

Tenants considering locking in new space now, before rents rise further, include Time Warner Inc., the financial services behemoth UBS and the law firm Mayer Brown. According to Cassidy Turley there are 446 tenants in the market chasing less than 28 million square feet of space.

Particularly well-poised are those developers who had begun preparing before the recession and can resume construction now at points further along. Pacolet Milliken Enterprises, the sister company of the textile firm Milliken & Company, demolished the building at 1045 Avenue of the Americas, a full block between West 39th and West 40th Streets, in 2009. The company has completed the schematic design for a 350,000-square-foot office building at the now-vacant lot, and has hired the Houston-based real estate firm Hines as a consultant.

“We feel very confident about the market and the location,” said Richard C. Webel, Pacolet Milliken’s president. He said the company had been speaking preliminarily with tenants, though it had not yet hired a broker. As for timing, “based on who we have talked to, the market should be there by 2015 or 2016, if not sooner,” Mr. Webel said.

Timing is critical as the market starts to revive, experts said. “The first buildings to be up and running will be most successful in grabbing an anchor tenant,” said Robert Sammons, the vice president for research services at Cassidy Turley.

Boston Properties is banking on this as it revives construction on a 1-million-square-foot office tower at 250 West 55th Street; building stopped in 2008 after the foundation was poured. Since it is partially built, it will be a relatively short time — mid-2014 — until Boston Properties can deliver the building to tenants. Already, it is in lease negotiations with the law firm Morrison Foerster as an anchor tenant.

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