THE TISHMAN BUILDING

666 FIFTH AVENUE (between 52nd and 53rd Streets)

Developer: Tishman Realty & Construction Co., Inc.

Architect: Carson & Lundin

Erected: 1957

View from the southeast

View from the southeast

By Carter B. Horsley

666 Fifth Avenue from the northThere must be some important rule of marketing that some developers read that emphasized the importance of wrapping to distinguish an otherwise routine product. Here the developers wrapped their rather conventional large office building in embossed aluminum.

Tinsel might have been more effective for despite a patterned treatment of the aluminum facade panels, the effect is more dull than glittery. At Christmas time, however, the 39-story, 1.245,000-sq. ft. building hangs up some brightly colored lighted stars on its facade that add some gaiety and from its completion the building has sported its street number in big red lights above the top floor, which happened to house for decades its "Top of the Sixes" restaurant and bar, which offered very nice views, one of the very few public places with high-level vistas in the city. The facility is now private, however.

The street-level of this development, however, was superb. Here was a great lobby in need of a great building.

It is not unusual for a building's lobby to be completely different stylistically from its facade, but this one made one want to cry out to experiment with its aesthetic in a new building, hopefully somewhere in the city.

Isamu Noguchi, the country's greatest modern sculptor, created three important elements here: the elevator bank ceilings and floors and the planted waterfall screen in the open lobby.

The main design element of the ceilings and the waterfall screen are sinuously cut thin railings, all different, that are used to create a rippling wave effect. (The lobby ceiling effect was clumsily copied on a larger scale at 222 Broadway.)

Noguchi screen in through-block arcade

Fountain wall by Isamu Noguchi in former lobby 

The ceiling railings are white-painted metal while the waterfall screen railings, shown at the left, are stainless steel.

The elevator bank floors are covered with irregularly cut marble pavers, mostly white, some black and others red. The effect is Mondrianesque.

These effects presage Deconstructivism by a couple of decades.

Noguchi floow and ceiling in elevator bank

Elevator bank sculptural ceiling by Isamu Noguchi

The "outside" lobby was also important because of its unusual layout and its wonderful large slabs of slate covering the floor. The Fifth Avenue frontage had two broad, unobstructed alleys, shown below, that penetrated deep into the building all the way back to the waterfall and the entrance to the elevator bank areas where the alleys were met by a through-block alley or galleria between 52nd and 53rd Streets. In the middle of the Fifth Avenue frontage, between the two alleys, was a rounded glass retail area that was been handsomely occupied by Alitalia. The retail spaces on the north and south sides of Alitalia had large clear store windows so that the alleys were well lit and did not suffer from blank wells.

Original lobby with alleys

Original Fifth Avenue entrance had deep and broad areas leading to Noguchi sculpture fountain

New avenue entrance has revolving doors

New Fifth Avenue entrance in 2000 with Noguchi's sculpture fountain seen through revolving doors

Mirrored angled base element

Base of building briefly had mirrored angled element in 2000 and 2001 but was removed in early 2002

Built before the city changed its zoning to encourage open plazas or enclosed public spaces such as atria or gallerias, this building innovatively opened up its ground floor spaces with high regard for the public and visitors. While the facade experiment was less successful, the building has aged well and is an inoffensive, modern background building with an abundance of respect for weary pedestrians.

Reclad base frontage in 2002

In early 2002, the building reclad its base and opened a clothing store, Hickey Freeman, in the center of its Fifth Avenue frontage, which moved in 2010 to Madison Avenue

The building replaced nine buildings and part of the site was once occupied by a mansion designed in 1882 by Richard Morris Hunt for William K. Vanderbilt that was torn down in 1927 for a commercial building and another mansion designed by McKim, Mead & White in 1905 for Mrs. William K. Vanderbilt Jr.

In 1998, however, the southern avenue retail frontage of this building was taken over by the National Basketball Association and the northern retail section was being converted for use by Brooks Bros., the famous Madison Avenue clothing store. The renovations were substantial and at complete odds with the building. Whereas before, the retail spaces were neatly contained beneath the building, the new stores are flamboyant and large. The basketball store's facade, shown at the right, is rather amusing with a design of nets and basketballs, but a unified vision of architecture has given way here, once again, to eye-level design.

facade of NBA store

NBA store has its own hoop

In 2000, the owners of the building decided upon another major change and installed a new retail store, Hickey Freeman, at its avenue entrance, which was then closed.

The notion that shoppers on Fifth Avenue can only discern things if they are very large is foolish, but even Rockefeller Center dared to damper with its landmark buildings's retail spaces and incredibly got the city's Landmarks Preservation Commission to agree to an enlargement of some of its windows in 1998.

A well-known architect liked to tell the story of Le Corbusier decided to build a country house for his mother and putting up a wall with small window spaces to focus the view. Preservationists should understand that changes can be well done and poorly done but in no case should an architectural decision be made by a marketing manager!

Rear of building

Rear of building as viewed on West 53rd Street

In 2002 the building replaced the large red "666" at the top of the building with "Citi."

On January 15, 2009, the following article by Sarah Mulholland and David M. Levitt appeared in the on-line edition of Bloomberg with the headline "Kushner’s 666 Fifth Avenue Is Depreciating Record-Setting Tower":

Jan. 15 (Bloomberg) -- When Jared Kushner closed on 666 Fifth Avenue, the Manhattan trophy property, for a record $1.8 billion two years ago, little did he know it was the peak for an investment that shows no signs of bottoming.

Since Kushner bought the building, its occupancy rate has dropped 10 percent and rental income has declined. Citigroup Inc., Kushner’s biggest tenant, vacated about 80,000 square feet of space in August and the skyscraper had about 69 cents in rental income available for every $1 owed in the third quarter, down from 80 cents in the second quarter, according to loan servicing documents examined by Bloomberg.

Even in the best neighborhoods of Manhattan, buyers who expected revenue to rise are struggling as vacancies increase across the U.S. While Kushner isn’t in danger of default because he has a fund to meet declining income, the January 2007 purchase shows the challenges facing investors who borrowed heavily to make acquisitions in the property boom. Loans more than 60 days late climbed to 0.91 percent in December from 0.32 percent a year earlier, data compiled by Barclays Capital in New York show.

“Cheap and plentiful financing made these deals possible,” said Jeffrey Lacilla, an instructor at New York University’s Schack Real Estate Institute who has almost two decades of experience in Manhattan commercial property. “The question now is whether they can live long enough for the building to be able to sustain itself when the reserves run out.”

Kushner, who also owns the weekly New York Observer newspaper, said new leases at the 41-story building will help bolster cash flow.

The reserve fund had $98.2 million as of Nov. 24 to cover debt payments and other expenses, according to a servicer report. Kushner sold a 49 percent stake in the building’s retail space in July for $525 million. Part of the proceeds were used to increase the fund, which had fallen to about $32 million as of the end of May, records show. The fund started at $100 million when the loan was originated.

“There’s eight years left on the debt, and we have $100 million in reserve so any inference that this building is in trouble or distressed is ridiculous, even in this crappy real estate market,” Kushner, 28, said in an interview.

So-called pro forma loans allowed borrowers to take on more debt on the assumption that higher income in the future would cover the interest and principal.

About 14 percent of commercial real estate loans that were bundled and sold as bonds in 2007 are not generating enough income to cover debt payments, JPMorgan Chase & Co. analysts, led by Alan Todd, said in a Jan. 6 report. There was a record $237 billion of commercial mortgage-backed bonds sold in 2007, according to JPMorgan estimates.

Kushner is a principal at Kushner Cos., the Florham Park, New Jersey-based real estate company founded by his father, Charles. Jared Kushner took on increased responsibilities for managing the company in 2004, the year his father stepped down as chairman after he pleaded guilty to tax evasion and lying about political donations.

When Jared Kushner stepped in, the company had more than 24,000 apartments in New Jersey, Pennsylvania, Delaware and Maryland, said Steven Solomon, Kushner’s spokesman. He made his largest purchase in January 2007, when he bought 666 Fifth Avenue at 52nd Street in New York for what at the time was the most paid for a single office building in the U.S.

Later in 2007, Kushner sold almost 17,000 apartments for about $1 billion in cash and $920 million in assumed debt.

When Kushner bought 666 Fifth Avenue, he got $1.215 billion from Barclays Capital. The loan was divided and sold as part of three commercial mortgage bond offerings, according to data compiled by Bloomberg. The purchase was financed with another $535 million in debt, which has since been paid off.

Kushner estimated the building would have average revenue of roughly $110 a square foot per year, according to loan documents. That’s more than double the average of $48.99 per- square-foot tenants were paying in rent at the time of the sale, the documents show.

Office rents in the neighborhood, which includes the landmark Plaza Hotel, averaged $86.26 a square feet in the fourth quarter, about 25 percent less than the peak of $115.66 in May, according to Colliers ABR data. Kushner said the average rent in the building is now almost $50 a square foot.

The building’s debt-service coverage ratio fell to 0.69 during the third quarter from 0.80 in the prior quarter, loan documents show. Income at 666 Fifth Avenue had been rising until the third quarter. The debt-service ratio was 0.65 when Kushner bought the property and was 0.73 on Dec. 31, 2007.

“Our cost issues aren’t debt payments, they’re tenant improvements and leasing commissions, which are fully funded for,” Kushner said. “We are well capitalized and conservative and feel confident that we will do well with this over time.”

Victor Calanog, director of research at property data service Reis Inc,, estimates that 666 Fifth Avenue is worth no more than $1.25 billion when taking into account “prevailing data from recent transactions.”

Kushner now is seeking to retain current tenants at higher rents.

Citigroup has more than 482,000 square feet, according to a report by CoStar Group Inc. One of its units is being offered a 28,248 square-foot lease renewal for $91.50 starting in September 2009, according to the servicer. The second-largest tenant, law firm Orrick, Herrington & Sutcliffe, is being offered a lease on 300,000 square-feet at $91.50 per-square- foot, records show. Its lease expires in 2010.

Built in 1957, the 1.5 million-square-foot building was known for its “Top of the Sixes” penthouse restaurant until it closed in the 1990s. The building is prized by tenants for its central location at Fifth Avenue and East 53rd Street, adjacent to Rockefeller Center, the Museum of Modern Art, St. Patrick’s Cathedral and the Cartier jewelry boutique.

“It’s one of the true trophy buildings in New York, one of the first great postwar buildings,” said Lawrence Longua, director of the REIT Center at NYU’s Schack institute.

Kushner said he has no plans to sell the building.

“We’re a family company,” he said. “We didn’t buy it to flip it. Right now as long as you don’t have to refinance today, you’re all right. There are buildings all over town with potential refinancing problems. 666 isn’t in any trouble.”

 

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