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Wall Street Journal / Biz - Money

N.Y. Developer Treads in Unusual Neighborhoods

Taconic Investment Partners has a history of redeveloping buildings in neighborhoods that traditionally don’t host offices and attracting established companies as tenants.

By

Keiko Morris

Taconic Investment Partners has a history of redeveloping buildings in neighborhoods that traditionally don’t host offices and attracting established companies as tenants.

That is the goal of Taconic and its partners on the 1.9 million-square-foot Essex Crossing project, which in 2020 is expected to deliver about 350,000 square feet of office space to the Lower East Side, a neighborhood that currently isn’t an office destination.

The scenario is a somewhat familiar one for Taconic. Perhaps the company’s most well-known property repositioning was 111 Eighth Ave., a 2.9 million-square-foot Chelsea building. In 1998, as part of a larger property portfolio, Taconic acquired and eventually overhauled the building. Search-engine company Google bought the property for $1.9 billion in 2010.

“Who would have thought in the early 1980s that [a company like] Google would have come to that part of town,” said Charles Bendit, co-chief executive of Taconic.

Taconic and its partners also completed the expansion of a landmark building in the Meatpacking District, leasing the entire six-story building to Samsung Electronics North America in 2014. A year later, the group sold the property for $200 million to TIAA-CREF.

While companies like being near other firms in the same industry for recruiting purposes and a certain environment, there are large employers who are willing to go beyond the usual office neighborhoods if they can establish and brand their own location in a cool office space, said David Falk, president of the New York Tri-State Region of real-estate services firm Newmark Knight Frank.

One of his clients who wanted to find office space in the heart of SoHo was drawn farther east to the Bowery because the building spoke to the company’s image, Mr. Falk said. That could happen in the case of Essex Crossing’s office space.

“For those that don’t need to be next to a company that does a similar business, they can go there and create their own campus,” he said.

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