CO-WORK COPYCATS Wework’S Growth Into an Office-Sharing Juggernaut Has Spawned Scores of Imitators Hoping to Cash in on a Boom Before It Goes Bust PAGE 16

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CO-WORK COPYCATS WeWork’s growth into an office-sharing juggernaut has spawned scores of imitators hoping to cash in on a boom before it goes bust PAGE 16

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FROM THE NEWSROOM | JEREMY SMERD Ticket selling run amok IN THIS ISSUE 4 AGENDA

NOT LONG AFTER I WROTE in February about downtown ticket 6 IN CASE YOU MISSED IT sellers’ assaulting one another, as well as tourists, the city 7 POLITICS NYU’s new stepped up enforcement of a ban in Battery Park on selling 8 WHO OWNS THE BLOCK president wants tickets to cruises and other attractions. to make the 9 ENTERTAINMENT school more “The NYPD initiative has had great success,” said affordable 10 ASKED & ANSWERED Michael Burke, COO of Statue Cruises, which is the 11 exclusive franchise to take tourists to the Statue of Liberty. RETAIL But it’s not been without consequences. “Enforcement 12 VIEWPOINTS out of the Battery has shifted the 13 VIEWPOINTS problem,” said Alliance for Downtown New York Legislation making 14 THE LIST President Jessica Lappin, who noted that the touts have moved outside 7 World Trade Center and the Staten its way through FEATURES Island ferry terminal. “Come July the numbers are going the city council 15 TALE OF TWO MAKERS to expand greatly.” is unikely to solve Ticket selling is a street-corner trade. Ban one side of the 16 CO-WORKING COPYCATS street and you flush sellers to the other. This is why the problem 21 GOTHAM GIGS legislation making its way through the city council is 32 EXECUTIVE MOVES unlikely to solve the problem. Councilman Daniel Garodnick believes his bill 33 SNAPS proposing that ticket sellers be licensed (and wear identifying vests) would give the 34 FOR THE RECORD police and tourists a tool to weed out bad actors. That’s good. At a minimum, anyone without a license will be banned from selling on the street. But simply 35 PHOTO FINISH legitimizing a practice that is already meddlesome may also exacerbate the problem. “They’ll be like a plague of locusts all over Bowling Green,” Burke said. That’s because Garodnick has agreed to reduce the licensing fee, but he does not plan to cap the number of licenses or limit how many ticket sellers can occupy a P. 21 single street corner. “That’s something we are looking at doing,” he said. MICKEY ASHMORE

The Department of Transportation will regulate vending in pedestrian plazas. CORRECTIONS The council wants the Department of Consumer Affairs to identify hot spots and Stifel Financial Corp. Assistant vice president MARY SLIWA problem areas and to come up with rules that would address them. “It’s a first attended an April 13 benefit for the New York City Mission step toward trying to get a handle on what’s obviously become a real issue,” Society. Her last name was misstated in Snaps published April 25. Garodnick told me. Licensing is tricky business. The proposed bill wants to give job opportunities to New Yorkers on the lower end of the income scale, but the legislation would also legitimize vending that many find annoying on already busy sidewalks. Capping licenses would solve the problem of overcrowded and emotionally heated street turf, but it will invariably create a secondary market in which permits will trade for tens of thousands of dollars, as they do for food carts. It’s hard to see how those ON THE COVER two goals can coexist. The bill as proposed may give police another enforcement ILLUSTRATION BY: HANNA BARCZYK tool, but it may also set this issue on a collision course.

DIGITAL DISPATCHES CONFERENCE CALLOUT May 24 Go to CrainsNewYork.com READ CRAIN’S BUSINESS Uber reached a deal OF GAMING with Newark Liberty Airport that preserves its access. Join us as we handicap the issues Drivers will wait for ride > facing the state’s casino industry, requests in an off-airport lot which is expanding thanks to and will not be permitted to changes in state law stand in areas set aside for but faces potential competition taxis to pick up passengers. from across the Hudson River in northern New Jersey. Milbank Tweed Hadley & McCloy has committed to taking 250,000 square feet at 55 JOHN JAY COLLEGE OF Hudson Yards, a 51-story tower being built by CRIMINAL JUSTICE Mitsui Fudosan, Related Cos and Oxford 8:30 a.m. to 10 a.m. Property Group. The firm is the second tenant [email protected] to sign on for space at the $1.4 billion tower. LISTEN to this week’s podcast, featuring Vol. XXXII, No. 18, May 2, 2016—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for double issues Neelam Brar, a co-working entrepreneur, the weeks of June 27, July 11, July 25, Aug. 8, Aug. 22 and Dec. 19, by Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address changes and a discussion about politics and to: Crain’s New York Business, Circulation Department, 1155 Gratiot Avenue, Detroit, MI 48207-2912. manufacturing. CrainsNewYork.com/podcast For subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one year, $179.95 two years.(GST No. 13676-0444-RT)

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 3 20160502-NEWS--0004-NAT-CCI-CN_-- 4/29/2016 7:48 PM Page 1

AGENDAWHAT’S NEW MAY 2, 2016 Legal or not, the mayor’s fundraising is dragging him down—and he knows why

ayor Bill de Blasio is doing all kinds of wonderful things—just ask him. He’s rescuing the public hospitals from financial ruin. He’s slashing homeowners’ water bills by $183. He’s building shelters for helpless, BAD IDEA: Using loop- Mabandoned pets. holes to avoid But all anyone wants to talk about is the mayor’s fishy fundraising. contribution limits does not That’s what happens when you’re being investigated by a U.S. inspire public attorney, a district attorney, a board of elections and the entire City confidence. Hall press corps. It’s unfair, the mayor says. After all, everything was done by the create a nonprofit that collected $4 million, ostensibly to support his book, and besides, he agrees the law should be changed to get big agenda. It ran TV ads promoting his already popular prekindergarten money out of politics. But until then, he has no choice but to abuse the program. But most of the money went straight back to the consult- system because his enemies are, too. ants, who profited from de Blasio’s fundraising prowess as the most Sorry, Mr. Mayor. That doesn’t fly. powerful man in city government. Even if the probes conclude that de Blasio and his bagmen didn’t Whatever public support the mayor reaped from the Campaign for quite cross the legal line, the public’s faith has been eroded. People One New York was wiped out, and then some, by the tawdry appear- don’t like when their leaders do an ance it created. His fundraising efforts end run around campaign-finance De Blasio says he’d “like to believe for upstate Democratic state Senate can- laws meant to deter quid pro quos. people are making donations because didates in 2014 backfired, as well—they The mayor knows donors give to all lost, in part because their association curry favor. “In theory,” he said, they think someone would be a good with de Blasio disturbed voters. Senate “you’d like to believe people are leader.” But no one does believe that Republicans, who kept control of the making donations because they chamber, have been hostile to him ever think someone would be a good leader.” We’d like to believe in fairy since. And prosecutors are scrutinizing his evasion of donation limits. godmothers, too. But when public unions seeking contracts, develop- As the mayor’s nonprofit became a liability, he shut it down, say- ers seeking approvals and advocates seeking legislation answer the ing it had achieved its goals. That’s spin, of which New Yorkers have mayor’s cash call, their motivation is clear: Money buys access and had quite enough. De Blasio should tell the truth about why special goodwill in City Hall. interests give, and stop taking their massive checks. Now, that would Upon his election, the mayor had his favorite political consultants change the conversation.– THE EDITORS

FINE PRINT The erosion of mid- and high-wage jobs means the generation defined as 19- to 30-year-olds earned about 20% less in 2014, adjusted for inflation, than their counterparts who entered the job market during the 1990s, according to a study by city Comptroller Scott Stringer. The report found that the average working 23-year-old in New York City earned $23,543 in 2014, compared with $27,731 in 2000, adjusted for inflation.

BY GERALD SCHIFMAN STATS

THE ISLANDERS HAD TROUBLE drawing fans in their first few 25 WORDS OR LESS months at Brooklyn’s Barclays Center, despite a consistently RISING TIDE strong record. But attendance and ticket prices have climbed as the team made its way into the playoffs. AND THE CITY AND THE

Such a level of Secondary market median listed ticket price “ for Islanders home games from Feb. 17 insensitivity, $74 through the end of the regular season, on if not hostility, April 10. Sixth-lowest in the NHL. Secondary market median listed ticket should not be an price for Islanders home Conference $195 Semifinals games. Fourth-highest accepted business among remaining teams. practice. AVERAGE DAILY ATTENDANCE, BY MONTH 16K — Borough President Ruben Diaz Jr. 15K in a letter asking Amazon to offer 14K same-day delivery in the Bronx, the 13K only borough without it. 12K 11K OCT NOV DEC JAN FEB MAR APRIL

ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY SOURCES NHL.com, Vivid Seats BLOOMBERG, AP IMAGES

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AGENDA ICYMI CRAINS EDITOR IN CHIEF Rance Crain publisher, vp Jill R. Kaplan assistant to the publisher Northwell’s margins get Alexis Sinclair, 212.210.0701 EDITORIAL editor Jeremy Smerd smaller but it gets bigger assistant managing editors Erik Engquist, Peter S. Green, Jeanhee Kim web editor Amanda Fung EW YORK STATE’S largest health system got copy desk chief Steve Noveck bigger in 2015, but Northwell Health’s art director Carolyn McClain photographer Buck Ennis investments have chipped away at its senior reporters Joe Anuta, Aaron Elstein, N Matthew Flamm, Daniel Geiger operating margins. Those investments in outpa- reporters Rosa Goldensohn, Jonathan LaMantia, Caroline Lewis, tient care and an insurance company are intended Addie Morfoot data reporter Gerald Schifman to help it grow revenue in the future. In the short web producer Peter D’Amato term, narrower margins could be a factor as it con- columnist Greg David contributing editors Tom Acitelli, siders taking on struggling hospitals in Brooklyn. Theresa Agovino, Barbara Benson, Erik Ipsen, Judith Messina, At the direction of the Cuomo administration, Cara S. Trager ADVERTISING the system is exploring the feasibility of partnering www.crainsnewyork.com/advertise advertising director Irene Bar-Am with several struggling Brooklyn hospitals. [email protected] or Northwell entered a strategic alliance with Brooklyn’s Maimonides Medical Center in 2015. 212.210.0133 senior account managers Northwell Health, formerly known as North Shore-LIJ Health System and led by CEO Michael Dowling, Zita Doktor, Jill Bottomley Kunkes, Rob Pierce, Stuart Smilowitz earned $89.7 million in operating income last year with an operating margin of 1%—underscoring how account managers Jake Musiker senior marketing coordinator difficult it is for an organization, even of Northwell’s size, to make money. That margin is down from LeAnn Richardson sales/events coordinator Ashlee Schuppius 1.2% in 2014. 212.210.0282 Though the 21-hospital nonprofit system has grown much larger than many of its regional peers, [email protected] ONLINE competitors have reported higher margins. NYU Langone Medical Center, for example, reported an general manager Rosemary Maggiore 212.210.0237 8.8% operating margin for fiscal 2015, which ended Aug. 31, 2015. The Great Neck, L.I-based system’s [email protected] CUSTOM CONTENT margins are weighed down by treating more Medicaid patients than some of its peers. The government director of custom content program reimburses health care providers at a lower rate than commercial insurers. Northwell’s com- Patty Oppenheimer 212.210.0711 [email protected] mitment to the Feinstein Institute for Medical Research also diminished the system’s returns, costing EVENTS www.crainsnewyork.com/events it $39.4 million last year. director of conferences & events Northwell lost $41.4 million on its insurance products in 2015, 25.6% more than the year earlier. But Courtney Williams, 212.210.0257 [email protected] the system is counting on health insurance as a long-term moneymaker. Northwell wants to control manager of conferences & events Adrienne Yee — JONATHAN LAMANTIA all parts of a patient’s care, improving quality and lowering health care costs. AUDIENCE DEVELOPMENT director of audience & content Big-gang bust bookseller in September. Riggio, 75, partnership development DATA POINT Michael O’Connor, 212.210.0738 In one of the largest gang takedowns in bought the company in 1971 when it [email protected] city history, federal prosecutors OWNERS OF ONE-, TWO- AND THREE- was a single Manhattan store and CRAIN’S 5BOROS www.5boros.com charged 120 members and associates of FAMILY HOMES WILL RECEIVE A established it into the country’s largest Irene Bar-Am, 212.210.0133 two rival Bronx organizations with bookstore chain. Riggio will remain [email protected] racketeering conspiracy, narcotics $183 CREDIT ON THEIR WATER BILLS the company’s biggest shareholder. SPECIAL PROJECTS conspiracy and distribution, and manager Alexis Sinclair 212.210.0701 THIS SUMMER, A 17% SAVINGS [email protected] firearms offenses. Big Money Bosses Charter-TWC deal advances FOR A TYPICAL SINGLE-FAMILY REPRINTS and 2Fly YGz were responsible for Charter Communications is on its way reprint account executive Krista Bora HOME. 212.210.0750 shootings, slashings, beatings and to becoming the second largest cable PRODUCTION robberies in northern parts of the bor- operator in the nation. It won U.S. production and pre-press director ough for years. antitrust approval for its $55 billion Simone Pryce media services manager Nicole Spell bought 550 Madison Ave. for around takeover of Time Warner Cable after it SUBSCRIPTION CUSTOMER SERVICE Pier55 gets thumbs-up $1.4 billion from the Chetrit Group and agreed to protect online video distri- www.crainsnewyork.com/subscribe The construction of a 2.7-acre Hudson Clipper Equity, which had plans to bution. California regulators still need [email protected] 877-824-9379 (in the U.S. and Canada). River park backed by Barry Diller and convert the property into condos. to approve the merger. $3.00 a copy for the print edition; or $99.95 Diane von Furstenberg cleared a major – AMANDA FUNG one year, $179.95 two years, for print subscriptions with digital access. hurdle. The U.S. Army Corps of Coach slims down to contact the newsroom: Engineers approved the project, which The maker of high-end handbags will www.crainsnewyork.com/staff includes grassy hills, an open-air stage cut about 2% of its workforce and 685 Third Ave., New York, NY 10017-4024 phone: 212-210-0100 fax: 212-210-0799 and a separate area for large events. restructure management as it contin- Entire contents ©copyright 2016 ues efforts to turn around the compa- Crain Communications Inc. All rights Nickel bags reserved. ®CityBusiness is a registered ny. Coach will incur $65 million to $80 trademark of MCP Inc., used under license The City Council is likely to pass a new million in pre-tax charges associated agreement. bill this week that will approve shop- with the changes. CRAIN COMMUNICATIONS INC. BOARD OF DIRECTORS pers’ being charged a nickel for each chairman Keith E. Crain Gap’s new design studio plastic bag. Council Speaker Melissa Hamilton booze president Rance Crain Mark-Viverito expressed her support Gap Inc. will open a 20,000-square- treasurer Mary Kay Crain, Cindi Crain The Pulitzer Prize-winning musical executive vp, operations William Morrow for the legislation last week, guaran- foot photo-and-design studio in executive vp, director of strategic teeing its approval. (See page 11.) Sunset Park, Brooklyn this spring, Hamilton is getting its own beer. The operations Chris Crain show has teamed up with Gun Hill executive vp, director of corporate making it the latest fashion firm to operations K.C. Crain Sony Building remains office tower move into Industry City. The industri- Brewing in the Bronx to create Rise Up senior vp, group publisher David Klein Rye. The name refers to lyrics in the vp/production, manufacturing David Kamis In a sign that the ultraluxury condo al complex’s other tenants include chief financial officer Thomas Stevens market may be slowing down, the new bathing-suit-maker Malia Mills and show and the history of grain, which is chief information officer Anthony DiPonio owners of the Sony Building will designer label Rag & Bone. associated with British colonies at the founder G.D. Crain Jr. [1885-1973] maintain it as an office tower. A sub- time of the Revolutionary War. The chairman Mrs. G.D. Crain Jr. [1911-1996] secretary Merrilee Crain [1942-2012] sidiary of Saudi investment conglom- Closing the book bottled brew will be sold at 40 bars in erate Olayan Group, along with Barnes & Noble founder Leonard the city for $12 to $15.

BUCK ENNIS London-based Chelsfield Group, Riggio will retire as chairman of the

6 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0007-NAT-CCI-CN_-- 4/29/2016 7:48 PM Page 1

AGENDA POLITICS

When spring comes, flowers bloom—and so do budgets

The mayor’s revised fiscal plan eats up all his savings BY PETER S. GREEN

ayor Bill de Blasio presented an term cautious revenue esti- updated $82.2 billion budget last mates and modest reserves on week, spending away $1.25 billion in the other.” savings that his agency heads had The mayor’s bailout of the RIKERS ISLAND: Money earmarked for mental-health Mfound. The new spending partially will cover rising struggling public hospital services could reduce deficits at city-run hospitals and clinics and, system is particularly note- violence at the jail complex. among other things, add mental-health services for worthy. De Blasio added $160 prisoners on Rikers Island. million to the $337 million If passed as proposed, the budget would be $2.5 promised in January to turn around Health + areas of city government. billion larger than its predecessor. Hospitals, which faces a $1.8 billion budget gap by fis- Critics say that strategy isn’t a radical enough The City Council will vote on a final budget by cal year 2020. departure from the system’s current course. “They’re the end of June, and will fight to add their priorities, City Hall’s plan, unveiled in a 56-page report last deferring some of the hard decisions about adjusting including programs for “New York City’s vulnera- week, anticipates closing that gap by generating $1.1 the scale of the operation,” said Charles Brecher, ble youth and immigrant populations,” its leaders billion more in revenue and cutting costs by $700 mil- research director of the Citizen’s Budget Commission. said. lion. Its strategy involves investing in its network of “The precedent so far has been for the city to backfill The budget dance between the council and the outpatient clinics; doubling membership in its when the plan falls short.” Ⅲ mayor isn’t the as it was during previous adminis- MetroPlus health plan; lobbying for more federal trations, when mayors would propose cuts they funding; and reducing its workforce through attrition, Rosa Goldensohn, Jonathan LaMantia and Caroline knew the council would not accept, such as fire- retraining and redeployment of workers into other Lewis contributed to this article house closings and shorter library hours. The reductions would trigger an uproar that distracted the council, advocacy groups and the media so they would leave the rest of the budget alone, yet make the council look effective because the mayor would give in at the end. This year, the mayor and the council are in relatively close agreement. The council wants the city’s Summer Youth Employment Program to offer 60,000 jobs; de Blasio proposed funding 54,263. The council seeks an extra $8.75 million to expand free school lunch to all public school children, not just low-income students. The council also wants legal services for immigrants to get so-called base- line funding so it won’t be part of future budget dances. The revised budget also includes $170 million to house a facility for youth currently sent to Rikers Island, plus $15.8 million more for new health services at the jail complex, including mini-clinics and special mental-health units. That funding will expand a model that has successfully reduced violence among the jail’s 8,000 inmates by helping patients take their medications. Building eight new units in the program and hiring 163 new health workers to staff them will cost $8.7 million. “Ultimately, it would be good if all the mental observation units had the staffing they need to provide adequate services,” said Jennifer Parish, director of criminal justice advocacy at the Urban Justice Center. Several budget additions will please con- stituents outside the mayor’s progressive Brooklyn base: $21 million for plows designed to clear snow from narrow streets in Queens, and money to build a new police precinct in the borough. There’s also $50 million for a new swimming pool on Staten Island and $5.5 million for a program to prevent and treat opioid addiction, a pressing issue there. De Blasio also added $250 million to the Retiree Health Benefits Trust Fund, which ostensibly will help the city pay for its retired employees’ health care but has been used as a rainy-day fund in the past; the allocation would raise the fund’s balance to a record-high $3.7 billion. The mayor added capital funds for street repaving and bridge repair. The Citizens Budget Commission, a watchdog group, said de Blasio’s new spending plan sent “mixed messages of short-run optimism and sig-

BLOOMBERG nificant new spending on the one hand and longer-

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 7 20160502-NEWS--0008-NAT-CCI-CN_-- 4/29/2016 7:38 PM Page 1

AGENDA WHO OWNS THE BLOCK REAL ESTATE

Could Kingsbridge Armory drama KINGSBRIDGE ARMORY put rising property values on ice? By New York standards, buildings in the Bronx neighborhood remain affordable, but prices—for now—are going up fast

BY TOM ACITELLI

n October 2014, a development team that included former New York Rangers great Mark Messier finalized a 99-year lease with the city to redevelop the vacant IKingsbridge Armory in the central Bronx into an ice-skating complex. The $350 2763 RESERVOIR AVE. million Kingsbridge National Ice Center would include nine rinks and a The family of Bronx-based attorney Kelechi 5,000-seat arena and would be open to O. Onyeobia bought this three-floor, three- unit, three-garage residential building in the 2808 JEROME AVE. the community. spring of 1994 for $205,000. The following In December 2015, a corporation backed by But in March, the de Blasio adminis- February, the family spent $10 removing a Manhattan-based nonprofit West End tration announced that it would make name from the deed. The city estimated its Residences, pop star Cyndi Lauper and market value for tax purposes at $606,000 turning over the lease, which had been Lauper’s manager, Lisa Barbaris, bought the this year. building for $750,000. The team then led a held in escrow, contingent on Messier conversion of the property into a 30-studio, and company finding the financing for 20,621-square-foot building for LGBTQ young the project. The developers countered that not adults called True Colors Bronx (a nod to one of Lauper’s ’80s hits). The residence officially having the lease made it difficult to raise funds. opened in September 2015. City Hall held firm, and in early April the developers sued, claiming the administration was scheming to block the armory conversion. Mayor Bill de Blasio and his aides made a counteroffer: The city would turn over the lease on the condi- tion that the developers would agree to vacate the property if they could KINGSBRIDGE ARMORY not come up with financing for the The city acquired the five-acre, block- $158 million first phase of the project long armory at 29 W. Kingsbridge by Dec. 30. Road for free from the state in 1996. The developers rejected the deal. Should the armory, which turns 100 next year, 5 E. 196TH ST. be redeveloped into that massive skating com- An LLC controlled by the Morgan plex, it will surely boost property values in Group, a Greenwich, Conn.-based developer of mixed-use projects, the neighborhood. bought this six-floor, 50-unit apart- Already, the whiff of the armory’s rejuvena- ment building in July 2009 for tion—it’s been vacant for 20 years—has driven $3.41 million. There are no redevel- opment plans filed with the city for up by double-digit percentages some the building. It generated more 2691 RESERVOIR AVE. retail rents in the surrounding area as than $721,000 in revenue before owners and investors eye its poten- An LLC based in the Bronx’s tony Riverdale neighbor- expenses in 2015, up from $603,300 three years before, tial. Real estate there is still cheap by hood bought the 62-unit apartment building in October 2015 for $8.4 million. That LLC then sold the building, according to real estate research New York City standards—an apart- which also includes 10 commercial units, to Jamaica, site Reonomy. The Morgan Group ment building with dozens of units Queens-based Parkash 2691 LLC for $17.35 million in did not respond to requests for can be had for under mid-March—more than twice the amount that 2691 comment. $5 million. Reservoir Ave. sold for six months earlier. Ved Parkash signed the buyer’s side of the deed for that March sale. But that could change. One apart- In 2015, tenant advocacy group Stabilizing NYC ment building near the armory traded named Parkash one of New York City’s seven worst in March for more than twice the “predatory equity landlords.” The group highlighted the thousands of violations the city has cited at his res- 2700 JEROME AVE. amount it had sold for in idential properties. The building generated $1.18 mil- October 2015. Ⅲ lion in revenue before expenses in 2015, up from A corporation controlled by Manhattan-based $719,690 three years earlier. developer B&B Urban bought the 6,300-square- foot commercial building and its 19,500-square- foot lot in January 2015 for $5.75 million. The developer then filed plans for a 13-story, 120- foot-tall apartment building with a mix of 137 affordable, middle-income and supportive- housing units, including ones for homeless people. The plans are still pending with the city. WWW.OASISNYC.NET, BUCK ENNIS

8 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0009-NAT-CCI-CN_-- 4/29/2016 3:57 PM Page 1

wpbid.com/smartmove AGENDA

If it can’t expand, theater may move DOWNTOWN WHITE PLAINS IFC Center seeks zoning OK BY ADDIE MORFOOT

zoning variance is all that stands in the A SMART MOVE way of the IFC Center’s plans to begin a $10 million-plus expansion to nearly FOR YOUR BUSINESS double its Greenwich Village footprint. • 25 miles from NYC ABut if the Board of Standards and Appeals denies • Easy walk to Metro North & only 35 minutes to Grand Central - the art-house movie theater its zoning change, IFC • Class A rents in the mid-$30s sf; Class B’s in the mid-$20s says it may leave the neighborhood when its lease • Top 100 Best Places to Live ends, even passing on its upcoming renewal option. “IFC intends to continue to serve the Village for • Over 2,000 new housing units currently in development decades to come by entering into a new, long- • Vibrant restaurant & nightlife scene term lease for the property if the variance is grant- ed,” IFC said to Crain’s. “However, if the expan- Want to cut your NYC rent in half? Contact Kevin Nunn, Executive Director, White Plains Business Improvement District, sion doesn’t happen, IFC might not be able to jus- at 914.328.5166 (Ext. 5) or [email protected] or visit wpbid.com/smartmove for more information. tify the lease extension beyond its current term.”A public hearing is expected this summer.

’S® ESS CRAINYORK BUSIN 13 N E W SEPTEMBER 30, 20

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FEAE;E+E+E35 EE E 7E * * + TO WWW.6CRAINSNEWY AQ@IH , - +E-22 '( )&#$&& 'LEIST"$, GO 524 3= H 57 366 7 E E E37767 3242ANY+ CRAIN 2%+’S#$E2/* 53 5=7E E0* !"#$%& 2 FIRMS OR 6735 836 3 3H --,25 ACC + O 6361UNTING E6?=26=77 - ; < < + 7 E E E3773> FULL +IQ LIST8UDA R OF TOP 0- ; - = 6H FOR THE0 IHH - + 3824 6?7: * + + + 6736 * == E4E0* / * 94 - 4 + ; + )E!#-"$ :> 7 (AV 6IQE 8QA8 +, 3:7 E E 53 :2 E377 66 6:56 - 7 - ; -- + 1 'E + 53+ 3:2 +-* + - + 7H +- . + * - 53 3529 24 A , 5>3 6 3H , + - - ?24 636 E=:>23777 53 333 * 36 829 3658 * 3624 IP AQ G8H I - 57 3>24 0;0 53 + 3? 6724 38: 7 5H * 67 ++ DSQDH I - -+ + * + - 682 333 - 57 >29 3=53 - 1 , 02 57 0 + * 6:E4E0* + , -* < 652 24 57 =24 * -* + "E)&&#( 7 5H - * 3=24 E < E E3773> "(E * , - Expand the Frick museum + - 3724 53 3329 6735 >7 - 3 2 + + < 9@ 636 E?5627877 "E)E * * 735 624+ 0-57 2 , -* - + 3 6735 662 +- - 536 57 + D AQ@IH , - + ( )&#$&& 2+2/* 524 < * + C 4 E; - "#$%&' 3242+ + 5=7E E0* + 12 6735 ; < . B 6735 632; AINSNEWYORK.COM/LISTS --, 0- - < 22 FEAE;E+E+EE E E E3773>, GO TO WWW.CR 0 + ; - E- CRAIN’S LIST ; + 4 OR ANY * + ! + * 382 TING FIRMS / + + 6736 * 94 - 4 + ; -- - 25 ACCOUN +- . * 1 +53 +3:2 +- THE FULL LIST OF TOP (AV 6IQE 8QA8 +, 3:7 53 :2 6:56 - 7 - + + FOR + * - - ?24 53 3529 0 53 3?24 53 A , , + 24 57 3>24 * 6736 829 3658 - ;0 + 6724 * 57 >29 3=53 - , - * - * + - 682 mong the many things hang their coats and use the bathrooms. expansion plan the Frick envisioned all - 1 + + * + 36 * < 652 0 2 57 =24 - 57 0 * - + , - 24 3=24 * + - 735 3 2 * < + - 3724 53 3329 6 >7 + - ved. Further duplication without that make New York City Modern wheelchairs cannot fit through those years ago. 0-57 2 -* < 9@ - + 3 6735 662 +- ll rights reser + , C4 D < * + 6735 632; E; - LISTS B ew York Business. © 2013 Crain Communications Inc. A SNEWYORK.COM/ . fro FEAm Crain'sE; NE+E+EE isit www.crainsnewyork.com. #NB13035 LIST, GO TO WWW.CRAIN great are its museums. the doors. The museum’s thoughtfully updated Reprinted E- with permiss22ion permission is prohibited. V RMS OR ANY CRAIN’S TOP 25 ACCOUNTING FI FOR THE FULL LIST OF More than 100 of them, Decades ago, museum officials and designed proposal, which requires each with its own bought and demolished three adjacent both a zoning exception and landmarks character, enhance the quality of life for buildings to expand their Fifth Avenue commission approval, is to replace the Networks, to Mayor Bill de Blasio’s Campaign for ved. Further duplication without ll rights reser A . © 2013 Crain Communications Inc. A Crain's New York Business .crainsnewyork.com. #NB13035 residents and keep tourism dollars institution and connect it to the Frick private garden with a public one on the Reprinted with permission from permission is prohibited. Visit www flowing into locals’ pockets. Art Reference Library. They couldn’t roof of a new addition. The neighbors’ Among the many things that make afford to do the project then, so they kvetching, boiled down, is that they will ll rights reserved. Further duplication without the city infuriating are its kvetchers. created a splendid private garden on the lose their view of a closed garden. We 2013 Crain Communications Inc. A ew York Business. © NB13035 ssion from Crain's N Reprinted with permi permission is prohibited. Visit www.crainsnewyork.com. # These are the folks who react to side with the other 8.3 million New change by asking, “What’s in it for The public Yorkers and 55 million tourists who me?” They bemoan any idea that would get a garden they can visit—and might inconvenience them. benefits offset a vastly superior “house museum” Which brings us to the Frick experience, too. Collection, the magnificent little art the lost views of The Frick could build on its property museum housed in the former a privileged few without a zoning action, but the current For more information contact One New York fund. Mayoral aides are being scruti- Hard Copies residence of Gilded Age industrialist rules demand a tall, thin building that’s Plaques & Eprints nized by city and federal prosecutors for potentially Frames Krista Bora, Reprint Account Executive (Digital Reprints) [email protected] • tel 212.210.0750 skirting campaign-finance limits. Sapan, who is not under investigation, gave $5,000 to the fund five months before the expansion plans were released. Though its plans face opposition, the IFC Center has been a mainstay in the neighborhood since it took over 323 Sixth Ave. in 2005. For the past 11 years, the theater has leased from Friedland GCA Properties the three-story, 160 year-old building as The General Contractors well as a vacant lot behind it, on Cornelia Street, Association of New York, Inc. where IFC would build additional cinemas—one below ground and two above. Bolstering its chances for getting the variance, IFC won Landmarks Preservation Commission approval in December of its plan to add six theaters, for a total of 11, by doubling its footage to more than 20,000 square feet. This would also double the center’s capacity to 948 people. IFC says it has plenty of demand for its indie-film fare, one-third of which is by New York filmmakers. It said it turned away 4,500 potential ticket buyers—missing out on $63,000 in sales—from 249 sold-out shows in the first quarter alone. At issue is that 16% of the vacant lot is zoned residential. Community members who oppose the Building Gateways variance to allow commercial use of that portion point out that the zoning applies to the land itself, not to the IFC, and the center’s plans do not justify for New York’s creating a large commercial lot in perpetuity. Currently, 65% of all ground-floor space on economic success Cornelia Street is used for commercial purposes. The center said that all foot traffic and use (with since 1909 the exception of an emergency exit on Cornelia Street) will continue to face Sixth Avenue. Construction of the tunnel box under Hudson Yards IFC General Manager John Vanco said keep- for Amtrak’s Gateway project, the ﬁrst step in building ing just a small part of the lot residential didn’t a new passenger rail tunnel under the Hudson River. make sense: “In order for us to build anything sensible or significant on the partially developed Ⅲ COURTESY KILMENT ARCHITECTS HALSBAND property, we need the variance.”

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 9 20160502-NEWS--0010-NAT-CCI-CN_-- 4/29/2016 3:26 PM Page 1

AGENDA ASKED & ANSWERED EDUCATION BY MIRIAM KREININ SOUCCAR

ANDREW HAMILTON New York University

ndrew Hamilton takes the helm during New York One of my highest University’s most exciting yet contentious period in priorities is afford- recent history.Its popularity and rankings are on a “ ability. We froze major upswing—last year NYU received 64,000 Aapplications for undergraduate study,the most of any private room and board for university.And the school’s budget has been steadily growing as it next year and kept expands its offerings, reaching nearly $2.9 billion in 2016, up from tuition increases $2.3 billion five years ago.At the same time, NYU has been battling to the lowest in 20 its neighbors over its aggressive expansion plans in Greenwich years. Village while facing discontent among the faculty and uproar over the school’s high tuition and relatively low financial aid. Hamilton, a world-renowned chemist, talked to Crain’s about how he plans to take this all on.

What is first on your agenda to tackle? One of the highest-priority issues for me is affordability. We have already made some short-term adjustments to get a handle on that. We froze room and board for next year and kept tuition increases to the lowest in the last 20 years. Tuition will increase by 2.9%, but the overall cost of attendance for undergrads will increase by only 2%. I have also formed a steering committee to look at cost cutting and alternative pathways for students to get a handle on the cost of attendance.

Combined, NYU’s tuition and room and board is the third highest in the U.S., DOSSIER according to Business Insider. Why is that, and are students at NYU paying too much? AGE 63 If you just compare tuition, you’ll find we’re in the middle of the 50 PLACE OF BIRTH universities we might consider as our peers. But we are located in one Guildford, England of the most expensive cities in the world. I want to get a handle on RESIDENCE Washington room and board, but NYU is tuition-dependent. We do not have a large Square endowment—per student last year, it was 170th in the U.S. EDUCATION University of Exeter, B.S.; University of What about financial aid? Recent government studies show that students on British Columbia, M.S.; financial aid at NYU pay an average of $25,441 a year compared with roughly University of Cambridge, $8,000 at Columbia. Ph.D. In the last 10 years, NYU’s financial-aid budget has increased from SPORTS FANATIC $90 million to $300 million. The average total debt for graduates is Hamilton is a die-hard now below $28,000, from $41,000 in 2009. Fundraising to increase Pittsburgh Steelers and Pirates fan, and used to play the endowment is a priority. We just passed the $550 million mark of soccer, rugby and cricket. a major fundraising campaign to raise $1 billion for financial aid. GRIPE OF THE MOMENT Where does the controversial $6 billion expansion stand? That was a key The way Lin-Manuel Miranda portrays the British in his hit mission of your predecessor, John Sexton. Is it as important to you? musical Hamilton. I don’t know where you got the $6 billion number from. We are involved in a number of major capital projects at NYU, which has less space per student than any other university I have come across. It’s 160 square feet per student, while Columbia has double that number and Yale four times as much. The project at Mercer Street and the renovation of an iconic building in Brooklyn on Jay Street for the Tandon School of Engineering are the two biggest projects going on at the moment. I have no intention of slowing down that momentum.

Will you continue the expansion of the controversial overseas programs? NYU is committed to being relevant to the times. Global forces are at

play everywhere, so for a university to be relevant it must educate BUCK ENNIS students to be able to navigate, lead and contribute to the challenges of the 21st century. NYU has it absolutely right.

What about this job keeps you up at night the most? The sign of a great university is that there is never enough money. At NYU we have many exciting and very pressing priorities, whether it’s investment in new academic programs or new facilities for students. I want to make sure we can do it all. Ⅲ

10 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0011-NAT-CCI-CN_-- 4/29/2016 3:57 PM Page 1

RETAIL

macies, prepared Council-speaker backing foods from restaurants and bags used for pro- means ban is in the bag duce and meats at gro- cery stores. Fee on plastic totes expected to pass May 5 BY ROSA GOLDENSOHN The legislation will also set standards for t’s tote-bag time, too long, plastic bags Purchases made compostable plastic New York. City have clogged our storm with food stamps will bags and prevent Council Speaker drains, littered our green be exempt from the bag bags from being falsely Melissa Mark- spaces and tangled in our fee, as will bags used marked “biodegrad- IViverito has thrown her trees,” Mark-Viverito said. for medication at phar- able.” Ⅲ support behind an effort to reduce plastic- bag use and waste, meaning that the legislation is likely to pass when the full council meets May 5. Mayor de Blasio is expected to sign the bill. Under the legislation, retailers would charge a nickel for each plastic or paper bag New Yorkers use at supermarkets and shops. The fee would Peter Manning go to the retailer—not FOUNDER the government. It is PETER MANNING NYC meant to encourage shoppers to bring reusable bags to stores instead of taking plastic ones. The city spends more than $12 million a year dumping An idea that 91,000 pounds of plastic bags in land- fills, according to the measures up. council. That trans- lates to 9 billion bags a year. The bill’s sponsor, Brooklyn Councilman Brad Lander, had already amassed ma- Understanding jority support for the legislation, but it could be the tightest vote of what’s important. the council’s legislative season. Opponents of the bill say the fee, which was reduced to 5 cents from Peter Manning came to M&T Bank with little more than a concept for his business. But it was a big one – a clothing line for 10 cents, would burden the poor by an estimat- men 5'8" and under. We understood his vision and customized a plan to get his dream off the ground. And today, this idea ed $100 a year. is thriving. Our eagerness to help businesses like Peter Manning is why M&T is a leading SBA lender1 in the country and why In an editorial April we’ve been recognized by Greenwich Associates for excellence in small business banking.2 To learn how M&T can help 25, Crain’s supported the bag fee, writing: your business, visit mtb.com/businessbanking. “It’s insulting to say a family will so contin- ually forget reusable bags that they’ll have to buy 2,000 plastic ones a year. That’s 38 bags a week.” Seattle, San LENDING SOLUTIONS | MERCHANT SERVICES | TREASURY MANAGEMENT | DEPOSITORY SERVICES Francisco and Los Equal Housing Lender. Angeles already have 1According to statistics released by the U.S. Small Business Administration (SBA) for total approved loans through the SBA’s 7(a) lending program during the federal fiscal year ending 9/30/2015. similar laws and have 2Based on the 2015 Greenwich Excellence Awards in Small Business Banking. seen drastic drops in ©2016 M&T Bank. Member FDIC.

ISTOCK plastic-bag use. “For

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 11 20160502-NEWS--0012-NAT-CCI-CN_-- 4/29/2016 3:27 PM Page 1

AGENDA VIEWPOINTS

De Blasio’s hospital plan is the same-old losing strategy Money and promises won’t reverse the decline in patients and revenues

HERE’S THE PROB- tic layoffs or downsizing, and throughout the city. The nonprofit H+H’S WOES BY THE NUMBERS LEM. The city’s pub- announce a somewhat vague plan to hospitals, almost all of whom have Decline in hospital stays over the lic hospital system transform the system, which has 11 better reputations than Health + past two years has been a burden on hospitals and about 70 clinics. Hospitals facilities, have targeted the 5% the budget for de- Let’s begin with the feeling of Medicaid patients they once shunned Decline in safety-net funding cades and a headache deja vu all over again. David to fill those beds. $1.2B by 2020 for the last four may- Dinkins promised reforms to fix a Given new choices, those Decline in Medicaid stays versus ors, each of whom “maze” of problems. Nevertheless, patients are increasingly choosing -3% 5% increase at other hospitals GREG DAVID sought a way to Rudy Giuliani confronted red ink nonprofits rather than public hos- make it sustainable. and poor care. He failed at privatiz- pitals. Even though Medicaid covers Market share for subsidiary Now the expansion of health care ing the system, so he appointed a more people because of the 15% MetroPlus, down 2 percentage under the Affordable Care Act has CEO who pledged to remake it to Affordable Care Act, H+H has seen points made NYC Health + Hospitals even “keep it competitive.” But the Medicaid managed-care patient SOURCE One New York Report less competitive. Yet, it is a - Bloomberg administration stays decline while its rivals have crucial safety net for the was forced to provide more seen increases. uninsured in New York and a % money to stabilize the Meanwhile, H+H’s insurance De Blasio’s response follows the massive employer with more finances. It obviously did subsidiary is losing market shares traditional playbook: Put in more than 40,000 people on the 36 not succeed. among insurers targeting Medicaid money and promise a plan to make payroll, making changes DROP in funding Now the long-term trends recipients, while it has been able to H+H better. His predecessors failed almost impossible, politically. for safety-net in health care and the attract only about 75,000 other cus- with that approach, and there is systems by What’s a mayor to do? If Affordable Care Act are mak- tomers. Approximately $1 billion in no reason to believe he will fare 2020 you are Bill de Blasio, you ing matters worse. The rise of safety-net support payments will any better. Ⅲ increase your annual con- outpatient centers and the disappear over the next several tribution by hundreds of millions of emphasis on shorter hospital stays years—a 36% drop—because the GREG DAVID blogs regularly at dollars, promise not to impose dras- has reduced demand for beds number of uninsured has declined. CrainsNewYork.com.

Is Cuomo the new Boss Tweed?

Promise to use union building workers is pure cronyism BY BRIAN SAMPSON

ate last month, Gov. these studies, they arrive loaded Andrew Cuomo made it with black boxes of redacted infor- clear that he cares more mation. And if these PLAs are so about political connections wonderful, why does the state Lthan empowering workers in New never conduct a post-project study York. This should be deeply con- to ensure the alleged savings were cerning for taxpayers and for those realized? who want to create more middle- But what’s now very clear is that class jobs throughout the state. going forward, every mandated As keynote speaker at the North study on the feasibility of a PLA, or America Building Trades Union’s leg- any study that Cuomo’s administra- islative conference in Washington, tion conducts related to this topic, D.C., Cuomo stated, “Every project will be tainted by his comments and we build is going to be built with his predilection to give business to organized labor.” He declared that he ANDREW CUOMO BOSS TWEED the unions he seeks to appease. would not sign any bills that could be The governor is making a mock- viewed as inequitable to union work- ery of competitive-bidding laws. ers. He has essentially delegated his he bilked the city of New York of Statistics, roughly 75% of the state’s His blind loyalty to big union bosses veto power to representatives from an massive sums of money. If Cuomo construction workforce does not is irresponsible. Further, it’s killing organization that donated large sums follows through with his ill-advised belong to a union. Cuomo is willing affordable housing and good jobs, to his campaign. These individuals are plan, he, too, will be remembered to steamroller tens of thousands of both of which are desperately need- Gary LaBarbera, the president of the for wasting the hard-earned money men and women, taking away their ed in New York. New York City Building and of the taxpayers of New York state, opportunity to work on any state Government was never meant to Construction Trades Council, and discriminating against tens of thou- projects, simply because they did pick winners and losers. That isn’t why James Cahill, the statewide president sands of merit-shop construction not contribute to his campaigns. America was founded. The governor of the organization. Yes, the governor workers and shutting down the The fact that the governor is should be doing everything in his has clearly stated his intent to usurp building of desperately needed willing to subvert bidding laws and power to go in a direction that creates state bidding laws and just give all of affordable housing. decrease competition is deeply fair, open and transparent bidding. the work to his campaign donors. The governor made it very clear troubling. He and his staff, along Instead he’s doing the opposite, and it His speech was reminiscent of that he does not support construc- with the state agencies he controls, will cost us all dearly. Ⅲ another powerful New Yorker’s tion workers who have decided that will exercise costly project labor from years past: Boss Tweed. being beholden to a union is not agreements (PLAs) backed by Brian Sampson is the president of the Tweed is chiefly remembered— right for them. So, who are the men flawed economic studies to justify Associated Builders and Contractors, and sometimes romanticized—for and women he’s demonizing and so the gift he is giving to organized Empire State Chapter, which repre- the cronyism of his Tammany Hall determined to work against? labor. When we file Freedom of sents more than 400 members in the

BLOOMBERG political machine, through which According to the Bureau of Labor Information Law requests to see state’s construction industry.

12 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0013-NAT-CCI-CN_-- 4/29/2016 3:41 PM Page 1

AGENDA VIEWPOINTS

Outrage over advertisement Publisher responds to readers upset by Turkish advocacy ad,others support bag fee,Condé Nast deal and Essex Street Market move

BAD CALL ON AD Armenian genocide. (“Money for Nothing”), A RISING MARKET You called atten- the market’s new I have been a Crain’s Your printing this it should be clearly While we appreciate tion to a recent event home in Essex reader for a number of material depicts yet noted that Condé Nast’s the coverage, your at the Lowline Lab Crossing will provide years now. I love read- another sold-out and 1.1 million-square-foot March 14 story on that not only drew even more visibility. ing your articles and either uneducated or lease at One World Trade Essex Street Market 8,500 customers but Any longstanding frequently use your malicious media brand. Center was a game painted an inaccu- also tripled vendor institution faces magazine for research Can you please changer for lower rate picture of the sales at the market challenges; however, and to find interesting arrange for a cancella- Manhattan. It was not ongoing work to fos- that day and created this year alone, three events happening in the tion and a refund of my only essential for the ter growth in the recurrent business. new vendors have city. To me, Crain’s remaining subscription? additional one million current location, as Such programs are chosen Essex Street stands for professional- I am appalled and square feet well as the expected just one example of Market as ism and integrity. disappointed at the lack of leases impact that the mar- the many events and their home. However, the paid of morals of a media signed at ket’s new space in marketing cam- We find that advertisement by the brand I held in such tower one Essex Crossing will paigns we are now extremely empower- Turkic Platform (April high regard. since the have on vendors. implementing. ing, and we encour- 18) is a politically DANIEL GULESSERIAN Condé deal The Lower East Combined with age your readers to motivated ad that advo- was Side Partnership, the ongoing updates to visit and join us in cates denying or down- Publisher Jill Kaplan announced, Vendor Association the building’s interi- celebrating 76 years playing the Armenian replies: but critical and the New York or and exterior, of continued genocide. After going to Throughout the years, a in bringing tenants such City Economic Essex Street Market operation. factcheckarmenia.com handful of advertise- as Media Math to tower Development Corp. is reaching a new ANNE SAXELBY and doing some research ments have been four and Group M to have worked collab- generation of shop- Chair into its claims, I believe brought to my attention tower three. The Port oratively to accom- pers while still Essex Street Market Vendor this ad is clearly a ploy (by our production Authority has leveraged plish a wide range of ensuring that we Association by Turkish nationalist department) for the Condé deal broadly publicity work, continue serving our TIM LAUGHLIN groups to downplay approval. The vast and in doing so, pro- which previously did existing customers. President their historical role in majority of these were duced hundreds of mil- not exist. We anticipate that Lower East Side Partnership the Armenian genocide. flagged because they lions of dollars of recur- Stating that Turks, along were suggestive, others ring revenue across mul- CRAIN’S WELCOMES SUBMISSIONS to its opinion pages. Send letters to with Armenians, were because they resembled tiple properties to fund [email protected]. Send columns of 475 words or fewer to victims, serves to Crain’s content or font. its core mission. [email protected]. Please include the writer’s name, company, diminish the suffering of Only once was an advo- JESSICA LAPPIN address and telephone number. Armenians and Turkey’s cacy ad brought to me President role in the genocide. for approval. Alliance for Downtown New York This form of historical Unfortunately, that revisionism is found not did not occur in this BAG FEE MAKES SENSE 񡑄񡑂񡑄񡑀񡑖񡑈񡑔񡑑񡑠񡑀 only in discussion of the instance, and we I applaud your editorial Armenian genocide, but offended you and possi- nudging New Yorkers to 񡑥񡑘񡑢񡑙񡑀񡑅񡑕񡑑񡑣񡑈񡑡񡑘񡑙񡑠 also in discussion of the bly other readers. For do the right thing on Rwandan genocide and that, I apologize. plastic bags (April 25). 񡑅񡑉񡑘񡑃񡑆񡑙񡑓񡑑񡑗񡑐񡑕񡑥 the Holocaust. Running the advertise- For decades, countries in I know that this ad ment is not an endorse- Europe have encouraged 񡑱񡑀񡑐񡑕񡑖񡑕񡑡񡑕񡑤񡑑񡑦񡑘񡑨񡑕񡑀񡑄񡑤񡑘񡑨񡑕񡑥 does not represent the ment by Crain’s or a use of recyclable bags 񡑱񡑀񡑉񡑕񡑤񡑠񡑑񡑡񡑕񡑡񡑦񡑀񡑇񡑑񡑖񡑡񡑕񡑦񡑀񡑇񡑢񡑦񡑢񡑤񡑥񡑀 views and beliefs of “sell out.” However, as and charged shoppers a Crain’s, but having it in a media company and small fee for plastic bags. 񡑱񡑀񡑆񡑅񡑄񡑀񡑆񡑘񡑖񡑗񡑦񡑘񡑡񡑖 your magazine does hurt news organization, we They have some of the 񡑱񡑀񡑄񡑕񡑥񡑦񡑘񡑡񡑑񡑦񡑘񡑢񡑡񡑀񡑄񡑘񡑥񡑣񡑑񡑦񡑓񡑗 your integrity in my eyes. do believe in free speech most advanced recycling; 񡑱񡑀񡑂񡑘񡑢񡑔񡑕񡑖񡑤񡑑񡑔񡑑񡑒񡑙񡑕񡑀񡑆񡑧񡑒񡑤񡑘񡑓񡑑񡑡񡑦񡑥 I would hope you vet your and that advertising is a we play dumb. ads better next time, as I form of expression that We have to deal would be hard-pressed to falls under the First head-on with floating 񡑒 񡑀񡑕񡑀񡑓񡑂񡑓񡑀񡑗∀ !񡑨񡑦񡑙񡑱񡑃񡑀%񡑨∀񡑀񡑖񡑙񡑧񡑙񡑠񡑣! support a magazine that Amendment. islands of plastic in our 񡑠񡑱񡑨񡑦񡑀!񡑢񡑙񡑀񡑗∀!!񡑣񡑧񡑡񡑄񡑙񡑘񡑡񡑙񡑀񡑤񡑧񡑨∃񡑥񡑙񡑘񡑡񡑙 allows itself to become a From a personal oceans, protecting our- 񡑕񡑧񡑘񡑀!񡑙񡑗񡑢񡑧񡑨񡑥񡑨񡑡񡑣񡑙 񡑀!񡑢񡑕!񡑀∃񡑙񡑀񡑖񡑱񡑣񡑧񡑡񡑀!񡑨 vehicle for genocide standpoint, as someone selves and our diminish- !񡑢񡑙񡑀񡑣񡑧 !񡑕񡑥񡑥񡑕!񡑣񡑨񡑧񡑀񡑕񡑧񡑘񡑀񡑦񡑕񡑣񡑧!񡑙񡑧񡑕񡑧񡑗񡑙񡑀 denial, whether you real- who lost family in the ing wildlife, and the 񡑨񡑠񡑀񡑙񡑥񡑙#񡑕!񡑨񡑱񡑀񡑙񡑰∀񡑣񡑩񡑦񡑙񡑧!񡑅񡑀񡑔񡑥∀ 񡑃񡑀񡑖%񡑀 ize it or not. Holocaust, I certainly consequences of plastic 񡑖񡑙񡑗񡑨񡑦񡑣񡑧񡑡񡑀񡑙񡑧#񡑣񡑱񡑨񡑧񡑦񡑙񡑧!񡑄񡑠񡑱񡑣񡑙񡑧񡑘񡑥%񡑃񡑀 ANDREW T. understand your outrage. in our environment %񡑨∀񡑀񡑕񡑧񡑘񡑀%񡑨∀񡑱񡑀񡑩񡑱񡑨񡑩񡑙񡑱!%񡑀񡑖񡑙񡑧񡑙񡑠񡑣!񡑀񡑠񡑱񡑨񡑦񡑀 Queens Your letters sparked an (particularly its entering 񡑣񡑡񡑧񡑣񡑠񡑣񡑗񡑕񡑧!񡑀񡑙񡑧񡑙񡑱񡑡%񡑀 񡑕#񡑣񡑧񡑡񡑀񡑕񡑧񡑘񡑀 update of our quality- our food chain). 񡑨!񡑢񡑙񡑱񡑀񡑱񡑙񡑘∀񡑗񡑙񡑘񡑀񡑨񡑩񡑙񡑱񡑕!񡑣񡑧񡑡񡑀񡑗񡑨 !񡑁 I HAVE ALWAYS APPRECIATED assurance process so that The quality of our air, Crain’s content and other advocacy ads are water and food affects 񡑇񡑘񡑀񡑇񡑙񡑑񡑑񡑗񡑀񡑤񡑓񡑡񡑒񡑀 seemingly unbiased reviewed before publica- every income group. view on current affairs tion. Your feedback— Each of us must take 񡑄񡑂񡑄񡑀񡑅񡑕񡑑񡑣񡑈񡑡񡑘񡑙񡑁 and business. good or bad—is critically responsibility. That As a descendant of important to us, and I responsibility starts at Armenian genocide sur- thank you for taking the the local level. Small vivors, however, I was time to let us know how changes, like reducing deeply insulted and you felt. We appreciate it. use of plastic bags, shocked by Crain’s pub- become big steps in pro- WTC DEAL WAS WISE lishing a full-page tecting our future. 񡑐񡑆񡑈񡑅񡑇񡑈񡑉񡑅񡑈񡑇񡑈񡑈񡑀&񡑀∃∃∃񡑅񡑘񡑘񡑙񡑥񡑙#񡑕!񡑨񡑱񡑅񡑗񡑨񡑦񡑀&񡑀񡑣񡑧񡑠񡑨񡑑񡑘񡑘񡑙񡑥񡑙#񡑕!񡑨񡑱񡑅񡑗񡑨񡑦 advertisement trivializ- Regarding Margaret JEANNE WILCKE 񡑇񡑑񡑘񡑡񡑦񡑕񡑡񡑑񡑡񡑓񡑕񡑀񡑁񡑀񡑐񡑕񡑣񡑑񡑘񡑤񡑀 񡑀񡑇񡑢񡑔񡑕񡑤񡑡񡑘񡑰񡑑񡑦񡑘񡑢񡑡񡑀 񡑀񡑃񡑢񡑔񡑕񡑀񡑃񡑢񡑠񡑣񡑙񡑘񡑑񡑡񡑓񡑕񡑀񡑀񡑈񡑕񡑩񡑀񡑃񡑢񡑡񡑥񡑦񡑤񡑧񡑓񡑦񡑘񡑢񡑡

BUCK ENNIS ing and denying the Donovan’s April 17 letter NoHo

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 13 20160502-NEWS--0014-NAT-CCI-CN_-- 4/29/2016 3:43 PM Page 1

AGENDA THE LIST REAL CAPITAL ANALYTICS’ LARGEST NYC FINANCINGS Ranked by loan amount, from January 2015 through April 2016

ADDRESS/ LOAN AMOUNT TRANSACTION RANK PROPERTY LOCATION (IN MILLIONS) TYPE DATE BORROWER(S) LENDER THE TOP Peter Cooper Village & Stuyvesant Town $2,700.0 Sale 12/18/15 Blackstone/ Fannie Mae FOUR 1 Gramercy Caisse de Depot 350 Tenth Ave. $1,500.0 Refinance 9/11/15 Related Cos./ Bank of China Ltd., Credit 2 (Shops & Restaurants at Hudson Yards) OMERS Agricole and DB Industrial Midtown west and Commercial Bank 200 Park Ave. (MetLife Building) $1,400.0 Refinance 4/1/15 Irvine Co./ Commercial mortgage- 3 Midtown east Tishman Speyer backed security 401 Ninth Ave. (1 Manhattan West) $1,250.0 Refinance 4/14/15 Brookfield Asset Wells Fargo and 4 Midtown west Management 19 other lenders 1095 Sixth Ave. (3 Bryant Park) $1,125.0 Sale 1/15/15 Caisse de Depot/ Commercial mortgage- 5 Midtown west Callahan Capital Partners backed security 11 Madison Ave. $1,100.0 Sale 8/18/15 SL Green Multiple commercial 6 Gramercy mortgage-backed securities and Deutsche Bank 1211 Sixth Ave. (News Corp Building) $1,035.0 Refinance 5/15/15 Callahan Capital Partners/ Commercial mortgage- 7 Midtown west Caisse de Depot backed security 501 W. 17th St. (High Line) $1,000.0 Sale 5/7/15 HFZ Capital Group JP Morgan, Blackrock Peter Cooper Village 8 Chelsea and SL Green & Stuyvesant Town 1633 Broadway $1,000.0 Refinance 12/1/15 Paramount Group LBBW and 10 other lenders 9 Plaza district LIST RANK 1 500 W. 33rd St. (30 Hudson Yards) $965.0 Refinance 9/11/15 Related Cos./ Bank of America, CIBC, LOAN AMOUNT $2.7 billion 10 Midtown west OMERS Wells Fargo and KeyBank 220 Central Park South $950.0 Refinance 9/28/15 Vornado Bank of China Ltd. 11 Columbus Circle 553 W. 30th St. (15 Hudson Yards) $930.0 Refinance 9/10/15 Related Cos./ Children's Investment 12 Midtown west OMERS Fund and New York state 225 Liberty St. $900.5 Refinance 1/22/16 Brookfield Asset Citigroup and multiple 13 Financial district Management commercial mortgage- backed securities 230 Park Ave. $785.0 Sale 5/5/15 RXR Realty/ AIG 14 Midtown east Blackstone 787 Seventh Ave. $780.0 Sale 1/27/16 CalPERS/ Multiple commercial 15 Plaza district CommonWealth Partners mortgage-backed securities 1 Water St. (1 New York Plaza) $750.0 Refinance 3/17/16 Brookfield Asset Wells Fargo 16 Financial district Management 770 Broadway $700.0 Refinance 2/8/16 Vornado Morgan Stanley 17 Greenwich Village Shops & Restaurants at 590 Madison Ave. $650.0 Refinance 9/23/15 STRS Ohio/ Multiple commercial 18 Plaza district Edward J. Minskoff Equities mortgage-backed securities Hudson Yards 250 Vesey St. (4 World Financial Center) $600.0 Refinance 10/30/15 Brookfield Asset MetLife LIST RANK 2 19 Financial district Management LOAN AMOUNT $1.5 billion 100 W. 33rd St. (Manhattan Mall) $580.0 Refinance 7/28/15 Vornado U.S. Bank and five other 20 Midtown west lenders 425 Park Ave. $556.0 Refinance 6/3/15 L&L Holding/ MassMutual Life 21 Plaza district GreenOak 11 Times Square $507.0 Sale 2/11/15 Norges Bank New York Life, 22 Midtown west Northwestern Mutual and NYSTRS1 1 West End Ave. (Riverside South) $500.0 Refinance 1/6/15 Delek Group/ Wells Fargo 23 Upper West Side Silverstein Properties 2 E. 55th St. (St. Regis New York) $450.0 Refinance 12/22/15 Vornado/ Credit Agricole 24 Plaza district Crown Acquisitions 111 Murray St. $445.0 Sale 7/6/15 China Taiping Insurance Deutsche Bank 25 Financial district 32 Sixth Ave. $425.0 Refinance 10/5/15 Rudin Organization Multiple commercial 26 TriBeCa mortgage-backed securities 140 West St. (Verizon headquarters condo) $390.0 Refinance 2/5/15 Magnum RE Group/ iStar Financial and 27 Financial district CIM Group H2 Capital Partners MetLife Building 5 Penn Plaza $378.0 Refinance 1/6/16 Haymes Investment Co. Multiple commercial LIST RANK 3 28 Midtown west mortgage-backed securities LOAN AMOUNT $1.4 billion 1411 Broadway (World Apparel Center) $375.0 Refinance 10/9/15 Caisse de Depot HSBC Holdings 29 Midtown west 888 Seventh Ave. $375.0 Refinance 12/11/15 Vornado Bank of America 30 Plaza district 1775 Broadway $350.0 Refinance 1/30/15 SL Green/ Multiple commercial 31 Columbus Circle Moinian Group mortgage-backed securities 731 Lexington Ave. $350.0 Refinance 8/5/15 Alexander's Inc. JP Morgan, Landesbank and 32 Plaza district Wells Fargo 850 Third Ave. $335.0 Sale 3/30/16 MHP Real Estate Services/ Blackstone and 33 Plaza district HNA Group Morgan Stanley 346 Broadway $334.0 Refinance 1/8/16 Peebles Corp./ Bank of America 34 TriBeCa Delek Group 100-280 Baychester Ave. (Mall at Bay Plaza) $333.0 Refinance 9/11/15 Prestige Properties and MetLife 35 Bronx Development Co.

Data are based on publicly reported lending activity for the period from Jan. 1, 2015, through April 14, 2016. Includes first mortgages made for acquisitions and refinancings on properties and port- folios of $2.5 million and greater; excludes seller financing, mezzanine financing and ground leases. In case of tied figures, deals are listed in order of transaction date (from oldest to newest). Real Capital Analytics Inc. is an independent research firm focused exclusively on capital investment markets for commercial real estate. RCA offers comprehensive information on activity in the industry. 1 Manhattan West In addition to collecting transactional information for property sales and financings, it interprets the data, including capitalization rates, market trends and sales volume. The firm publishes a series LIST RANK 4 of Capital Trends reports and offers an online service that provides real-time, global transactional market information. Visit rcanalytics.com. 1-NYSTRS-New York State Teachers’ Retirement System.

BUCK ENNIS, COURTESY COS., RELATED ASSET AND BROOKFIELD OMERS MANAGEMENT Additional research by Gerald Schifman. LOAN AMOUNT $1.25 billion

14 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0015-NAT-CCI-CN_-- 4/29/2016 4:01 PM Page 1

MANUFACTURING | 3-D PRINTING

THE BREAKOUT ROOM: After cooling off, printed products at Shapeways’ Long Island City factory are dug out of trays before being cleaned, polished and shipped.

re Pettis launched his desktop 3-D- MakerBot’s struggles have only reinforced printer company, MakerBot, in Shapeways’ approach. “I simply believe the 2009.With his Brooklyn manufac- [desktop printer] was not a consumer product,” TALE turing ethos and trendy MakerBot Weijmarshausen said. “It’s much more about the outlets, he became the face of the final product than about the tool.” city’s maker movement. Weijmarshausen declined to provide revenue BPeter Weijmarshausen, meanwhile, brought figures or say whether Shapeways is profitable. He OF TWO his on-demand, industrial 3-D-printing com- noted that it had about 20 employees four years pany, Shapeways, from the Netherlands in 2011. ago and now has 200, including 70 in Long Island He quietly set to work in a Long Island City fac- City and another 70 at its corporate headquarters tory that today still doesn’t have a sign on it. in Manhattan. Since its founding, in 2007, the MAKERS Last week, MakerBot’s a-printer-on-every- company has raised $76 million in venture capital desk approach went out the window when the from A-list backers that include Union Square MakerBot, the face of 3-D firm announced it was outsourcing the manu- Ventures and Andreessen Horowitz. printing in the city, facturing of 3-D printers to Florida-based Jabil, MakerBot still believes there will be a strong which will be producing those printers in consumer market for its 3-D printers, but not continues to falter, cheaper locations like China. Meanwhile, until they are easier to use. In the meantime, it’s while little-known Shapeways’ 25,000-square-foot facility is five focusing on the educational and professional times bigger than it was when it opened in 2012. markets. “We’re working very hard to address Shapeways cleans up Every day, the company ships more than 600 the consumer market,” CEO Jonathan Jaglom packages containing iPhone covers, coffee cups, said last week. “But it’s a few years away.” BY MATTHEW FLAMM drone accessories, model trains, jewelry, wear- Others think even that estimate is a stretch. able tech and assorted knickknacks. The items “The average consumer buys these printers, are manufactured for the designers and others downloads a few basic [designs], and then the who sell their goods through Shapeways’ Etsy- printers sit there and collect dust,” said indus- like marketplace. try analyst Terry Wohlers. Both men thought being close to their cus- In the next year, Shapeways expects to have tomers meant a New York City location was key. new industrial printers that will be 10 times Yet the fates of their firms show the strength of faster than the ones it uses now, enabling prod- Weijmarshausen’s vision: Customers have no ucts to be manufactured overnight, rather than interest in owning 3-D printers; they really just over four to five days. want their 3-D printed products. At least one other New York company has “We have factories in two of the most expen- adopted a strategy of providing 3-D printing as sive places in the world [to manufacture],” a service—and has kept production in Brooklyn. Weijmarshausen said, referring to the Voodoo Manufacturing, which launched in East Shapeways facility in Eindhoven, The Williamsburg last October, uses desktop print- Netherlands, where the company began. Both ers networked to each other to produce custom factories are successful, with “healthy mar- marketing materials for the likes of Verizon gins,” he added. Wireless and General Mills, as well as parts for MakerBot’s bet that consumers would want to hardware startups. The company, which has own low-priced 3-D printers was an initial suc- just eight employees, is almost profitable, co- cess for Pettis, who sold the company to founder and CEO Max Friefeld said. Minnesota-based Stratasys in 2013, for $400 mil- “We can produce parts so cheaply at these lion. But a large consumer market failed to mate- volumes that we are really competing with tra- rialize. Pettis later left the company, and MakerBot ditional manufacturing companies, more than Ⅲ BUCK ENNIS closed its stores and began layoffs last year. with other 3-D-printing services,” he said.

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 15 20160502-NEWS--0016,0017-NAT-CCI-CN_-- 4/29/2016 4:06 PM Page 1 REAL ESTATE | CHASING WEWORK WeWork TheyWork Everyone, it seems, is opening a shared office space. But is the boom in co-working also the next bubble? BY DANIEL GEIGER AND MATTHEW FLAMM

INDUSTRIAL EDGE: To make his co-working space stand out, Shlomo Silber spent $3 million to restore the warehouse feel. S I N N E

K C U B

16 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0016,0017-NAT-CCI-CN_-- 4/29/2016 7:35 PM Page 2

o fill the 21st floor at his newly purchased midtown office building, Charles Aini polished the concrete floors, erected 37 glass partitions and built a white- marble reception desk that dou- bles as a minibar. Then he came up with a fash- HAPPY HOURS: Zoe Miller Tionable sounding name, Workville, and jumped repurposed an old restaurant to give her co-working space a shot. into one of the fastest growing sectors in the city: co-working. “This is an incredibly lucrative business,” Aini said. When the hottest star in New York City real estate doesn’t own a single square foot, even landlords start thinking, What would Adam Neumann do? Six years ago, Neumann, a former Israeli navy officer, left GreenDesk, a co-working space he founded with Brooklyn landlord Jack Guttman, to launch WeWork on a bet that he could transform the way businesses lease office space. Since then, Neumann, 36, has raised $1.4 billion and leased 3 million square feet in New York City alone, according to the real estate database CoStar. That’s enough to fill the Empire State Building, with 200,000 square feet left over. Valued at $16 billion, the Manhattan- based company is in 25 cities around the world and worth more than all but two of New York’s biggest landlords. Stratospheric growth That kind of stratospheric growth has in New York increased 49% from 2014 to 2015 to month in rent from them. A startup veteran, he spawned copycats across the city—and possibly reach $7 billion, according to research firm CB draws additional revenue by helping with market- the next big real estate bubble. Manhattan has a Insights. Meanwhile, there are 4.7 million free- ing pitches, investor presentations and business record 5.3 million square feet of shared office lancers in the New York metro region, accord- strategy. His second Spark location—20,000 square space, according to real estate services firm ing to a 2015 report commissioned by the feet—near Bryant Park, is in the works. Cushman & Wakefield; and Brooklyn has about Freelancers Union and Upwork. The growth in co-working spaces has sparked 1 million square feet, with another 400,000 feet Jason Bram, an economist for the Federal intense competition. Cheni Yerushalmi founded to come in the near future, according to a report Reserve Bank of New York, says there’s still Sunshine Suites in 2001, well before co-working from New York University’s Rudin Center for plenty of room for co-working spaces to grow became a craze. He built the company up to four Transportation. There are 53 co-working in New York City because employment in the locations, including a roughly 36,000-square-foot brands in Brooklyn alone, according to an fields most likely to use shared space—tech, flagship space on Desbrosses Street in Tribeca. But industry report, and at least 70 in Manhattan. advertising, media and internet—is expanding then WeWork came along. The companies have names intended to by more than 10% a year. “And we became less desirable because we evoke a feeling as much as promote an identity Of course, not every startup will survive. had limited windows and a lack of natural that helps them stand out in a crowded field: And when they fail they could take their co- light,” Yerushalmi said. “It was hard to com- Industrious, Blender, Grind, District, Fueled, working landlord with them. pete against them, and although we could fill the Yard, the Vault. There’s even an Upstart “As with many other startup ideas that get the space to a point, we weren’t retaining ten- among the upstarts, a PsychWorks for thera- hot—think daily deals or food delivery—a bunch ants at the same rate as previously.” In 2013, pists and a Bar Works, which Yerushalmi closed the Desbrosses repurposes pub and restaurant location. spaces and imposes a three-drink “MANYWILL FAIL.THE ONES THAT cutoff on its members (during Outworking WeWork working hours). And when SUCCEED ARE DEFINITELYGOING TO To avoid Sunshine’s fate, co- you’re stuck for a name, just drop BENEFIT FROM ATREND TOWARD START- working companies have put a a vowel: Coworkrs. premium on design and ancillary “It’s absolutely unprecedent- UPS AND INDEPENDENT CONTRACTORS” services. Others have teamed up ed,” Ken McCarthy, Cushman’s with building owners. chief economist, said of the To outdo WeWork’s creative industry’s growth. “This is a business that is of new entrants rush in,” CB Insights CEO aesthetic, the founder of Coworkrs, Shlomo attracting a very large demographic to a new Anand Sanwal said. “Many will fail. The ones Silber, said he and his landlord together spent and different work environment.” that succeed are definitely going to benefit from about $3 million to restore the industrial charm of Co-working companies follow the same a trend toward startups and independent con- a former tile factory in Gowanus, Brooklyn, basic formula as WeWork, which has tapped tractors. That rising tide lifts the few winners.” including exposed brick walls and wood-beam into millennials’ desire for hip, amenity-filled Just how lucrative is owning a co-working ceilings. He even had a cast-iron staircase lifted in spaces that foster collaboration. The offices fea- space? French-born Christophe Garnier found a by crane and installed in the center of the space. ture both open, communal workspaces and 5,000 square–foot space in 2013 near Union Square Open for four months, the 47,000-square-foot enclosed, private offices. In addition to desks that was bargain-priced at less than $40 a foot location is 70% full, and tenants include Lenny and cubicles, there are seats at a communal annually, or around $17,000 a month. He named it Letter, the feminist arts online newsletter found- table and even small enclosed spaces. Most Spark Labs, rented out desks to friends and grew it ed by Girls creator Lena Dunham. important, there are flexible leases that allow into a New York foothold for international tech and Another tenant is Farmigo, a company that tenants to grow or contract. media startups that pay around $500 per person per lets consumers order food straight from the Behind the rush toward co-working spaces is month. Around 120 members from 30 companies farm. CEO Benzi Ronen said he doesn’t care that the growth of the freelance economy and the and 15 countries are now based there—about a fifth his 3,400-square-foot space comes to about $70 venture capital flowing into local startups that of them Americans looking to forge overseas con- per square foot in a neighborhood where the

BUCK ENNIS are the sector’s target market. Venture funding nections. Garnier pulls in an estimated $40,000 a CONTINUED ON PAGE 18

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 17 20160502-NEWS--0018-NAT-CCI-CN_-- 4/29/2016 7:36 PM Page 1

REAL ESTATE | CHASING WEWORK A LUCRATIVE BUSINESS MODEL going rate is almost half that. Building out an office of similar quality would have added another $100,000 to his costs. More important, LOCATIONS SQ FT COST PER COST he was able to negotiate a two-year arrange- NAME IN NYC IN NYC SHARED DESK PER OFFICE ment with Coworkrs. That suits the needs of his 1 seven-year-old company far better than a con- WeWork 25 3,000,000 $625 $1,350 ventional office lease, which could lock tenants Spark Labs 1 5,000 $350 $2,2002 into a static space commitment for up to a decade. Industrious 1 20,000 $500 $1,3253 “When you’re a startup, it becomes very The Yard 7 170,000 $295 $1,2003 hard to predict your growth rates,” Ronen said. “We took space we thought would be good for Coworkrs 4 137,000 $350 $7504 us for the next two years.” Grind 4 52,000 $550 $3,5005 More than just a desk Workville 1 12,000 $500 $1,5003 Buoyed by his success in Gowanus, Silber Notes: Prices may vary by location. 1-Obligatory membership starts at $45/mo. 2-Price is for three-person office with unlimited conference-room leased a roughly 30,000-square-foot space in use. 3-Price is for two--person office. 4-Starting price for private office. 5-Price is for four-person office. Bushwick, which, like Gowanus, has no WeWork locations yet and where prices are around $30 per square foot. This brings the “This is not just a desk-rental business,” she workspace with a few private rooms in back. number of Coworkrs locations to five, including said. To grow District to anything like While street-level retail space in Manhattan 90,000 square feet at three spaces in Manhattan WeWork’s size, Brar said she will need to attract can run $125 to $150 per square foot, Black said that Silber says are nearly full. major investors. But first, she has to be big he pays well under $100, partly because his “Co-working is not as much a real estate enough to catch their attention, but she notes business is a more desirable tenant than a noisy, business as it is about hospitality, in terms of that if WeWork falters, that window will close. trash-generating restaurant. (He also gets focusing and taking care of the needs of our The Vault, a San Francisco-based co-workspace, like the basement and a mezzanine, that members,” Silber said. “There are a lot of hotel ing space, leased a 20,000 square foot location the landlord doesn’t figure into the price.) brands in that market because some people like in Crown Heights earlier this year. Kevin Smith, big chains and others like boutique hotels.” the Vault’s founder, insists on hand-selecting a Hedging against a downturn Nataly Antar, director of operations and mar- limited roster of technology companies in With monthly rents of $400 for a shared desk keting at affordable textbook startup Wessex their infancy, betting that they can facilitate and $550 for a dedicated one, Bar Works’ 39th Press Publishing, said she loves the aesthetic at each other’s growth. Street location broke even at 75 members, and District. Faux-vintage lightbulbs, aged hard- “‘Collaboration’ is a word you hear a lot, and now, with more than 100 members, is prof- wood floors and sleekly minimalist furniture it’s this almost-mythic concept,” Smith told itable. The bar “is a small part of the concept,” lend the airy four-story building on Broadway Crain’s when the company signed its lease at Black said: On two recent visits at different near 29th Street a “Zen” feeling, she said. And 1000 Dean Street in December. “You’re sup- times of the day and evening, its only occupant the price is right: Her two-person office costs posed to put people in a building, and the col- was a Crain’s reporter checking the beer list. $1,600 a month. “I feel like I am in a chicly dec- laboration will just happen; but it doesn’t But the bar and nearby tables do add atmos- orated apartment,” Antar said. “I don’t feel like unless someone is there directing the show.” phere. “I thought Bar Works was cool,” said Carrie I am in an office.” The collaborative theme may have reached its Sheffield, who launched her millennials-focused To generate new revenue, District founder outer limit with Bar Works, which opened its right-leaning website Bold at the location in Neelam Brar, a former investment banker, will first outpost last fall in the space once occupied November. WeWork, which she also looked at, offer her tenants—members, in the parlance of by Italian restaurant Appetito, at 47 W. 39th “felt so corporate,” she said. co-working spaces—business development and Street. Led by Britons Jonathan Black and Zoe WeWork is betting that being the co-working consulting services, pitch nights and other Miller, the new venture leaves the bar intact, industry’s colossus is good for its customers, even members-only events, and possibly child care. and turns the dining area into a casual open if it rubs some potential members the wrong way. Beyond New York City, the firm has leased roughly 2 million square feet around the world and hopes that its economies of scale can allow it to offer benefits that customers won’t be able to find elsewhere, including health insurance, business services and a vast network in which profes- FULL HOUSE: District will sionals can connect with one another to solve offer business-development problems, collaborate and co-invest. By becom- consulting and maybe even day care. ing an irreplaceable business platform for tens of thousands of people and not just a place to park themselves in front of a computer, WeWork is hoping members won’t opt simply to pack up and work from home or at a café the next time the economy dips. Some co-working firms are already taking steps to lessen the risk of losing business in a downturn. The Grind partnered with Verizon to open a co-working space in the telecom giant’s building at 140 West Street. CEO David Beale said his firm pays a below-market rent in exchange for splitting the location’s profits with Verizon. The Grind opened its fourth Manhattan outpost, at 1216 Broadway, in a similar profit-sharing deal with its landlord. “What’s important is that there’s collaboration between us and the asset owners,” Beale said. “When business is doing well and we’re doing great, they get to share in the proceeds, and when things change—and they always do— these more flexible arrangements keep the Ⅲ BUCK ENNIS interests of both parties aligned.”

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20 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0021-NAT-CCI-CN_-- 4/29/2016 7:36 PM Page 1

GOTHAM GIGS

STOREROOM APARTMENT: Mickey Ashmore throws parties and sells shoes out of his East Village apartment.

Selling shoes, softly, with a glass of wine A handmade Turkish slipper gets a makeover for New York and goes flying out the door MICKEY ASHMORE

ickey Ashmore is just 29, but he treats cus- Marys, Ashmore sold 40 pairs of shoes. AGE: 29 tomers of his Turkish footwear company The shoes come from Gaziantep, Turkey, historically a with old-world hospitality, inviting guests shoemaking town, where Sabah’s lead stitcher is a fifth- BORN: Dallas into the ground-level East Village apart- generation craftsman. With Ashmore’s orders, his work- EDUCATION: Wharton School, Mment that serves as his home and a showroom for Sabah shop has grown to about 20 employees, including three University of Pennsylvania Shoes. When an unscheduled customer arrives, he offers other stitchers who each can sew 10 to 20 pairs a day. FORMER FINANCE GUY: After her a glass of white wine and carts out 10 “We’re always producing,” Ashmore said. graduating, Ashmore worked in pairs of leather and suede slippers from the We’re their “We’re their only buyer, and they’re our only finance and strategy for Microsoft in shelves in the hallway between his living “ supplier.” Expansion plans include Sabah Seattle. When he had the chance to room and bedroom. only buyer, Houses in Los Angeles and Austin, Texas, with rotate to a position in Istanbul, a life- The slip-ons, at $190 a pair, come in 20 and they’re dreams of London, Paris and Tokyo. long dream, he took it. He started colors but just one style. Soles are made of our only Ashmore discovered Turkish slip-ons while throwing the soon-to-be-profitable durable water-buffalo hide covered in supplier” working for Microsoft in Istanbul. He relocated Sabah Sunday parties in part rubber that artisans attach to bright to New York in 2012 and asked a shoemaker to because, after returning to New York, leather uppers with a single heavy-duty customize the shoes for his new life, removing he missed the sense of community thread. Sabahs are sold from the showroom on week- the traditional pointy toe and adding a rubber sole. He he had found in Istanbul and wanted ends, by appointment or online. Ashmore also holds started ferrying suitcases full of the loafers back from vis- to see his friends more often. traveling pop-ups around the world, selling more its to Turkey, then ordering shipments. He quit his job A GIFT: Ashmore’s Turkish girl- than 500 pairs a month, for about $1 million a year. two months after selling his first pair. friend gave him his first pair of slip- About half his sales come from mail and web orders. Word-of-mouth and repeat purchases by loyal cus- pers as a gift. The worn-in loafers Many visitors turn up just for the parties he throws, tomers have fueled the business. Still, he worries the travel the world to help set the often the first step in a long soft sell. When he first start- Sabah shoes could turn out to be just a trend, not a peren- scene at Sabah pop-ups. Right now, ed bringing back shoes from Turkey, three years ago, nial classic. “The goal is that people who are buying “my original pair is in Japan,” he Ashmore sold them at Sunday afternoon get-togethers. Sabahs from us today are buying Sabahs from us in 10 said. “It’s beautiful.” — CARA EISENPRESS BUCK ENNIS At a recent Sunday party, while 50 guests sipped Bloody years,” he said.

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 21 20160502-NEWS--0022-NAT-CCI-CN_-- 4/29/2016 7:37 PM Page 1

SNAPS

Brooklyn Museum sets a record Anne Pasternak’s tenure at the Brooklyn Museum is off to an impressive start. She took the helm of the institution last fall. The first major fundraiser held under her reign, on April 20, brought in a record $2.3 million. More than 750 people attended the dinner held at the museum, which was decorated with a forest of white totems inspired by the Brancusi sculptures. Another 600 revelers joined in a post-dinner dance party.

Artist Tom Sachs, who has an installation on view at the Brooklyn Museum, with his wife, Sarah Hoover, and curator/art dealer Jeffrey Deitch at the fundraiser that was held at the institution.

Brooklyn Museum Board Chair Elizabeth Sackler and Brooklyn Museum Director Anne Pasternak Big Brothers Big Sisters scores $2M at the fundraiser.

American Skin Association gala glows

Cam Newton, quarter- back of the Carolina Panthers and 2015 NFL MVP, Lisa Sherman, president and chief executive of the Ad Council, and Charles Phillip, chief executive of Infor, at the April 18 benefit for Big Brothers Howard Milstein, Emigrant Bank chairman and chairman of the American Skin Big Sisters of New York Association, Dr. Richard Granstein, an ASA board member, and WNBC-TV City at the Waldorf weather forecaster Dave Price at an April 18 ASA fundraiser at the Plaza Hotel. Astoria hotel.

Dr. Michael Ghalili and his wife, Dr. Doris Day, Hector Batista, chief executive of Big Brothers Big Sisters of New York City, associate professor of dermatology at NYU Pam Iorio, president and chief executive of Big Brothers Big Sisters of Langone Medical Center, with Humberto America, and Gerald Hassell, chairman and chief executive of the Bank of Antunes, ASA board vice chair, and his wife, Erika New York Mellon, at the BBBS of NYC event, which raised $2 million for the Antunes, at the ASA gala, which raised $656,000. mentoring organization. NICHOLAS HUNTNICHOLAS OF GETTY IMAGES, ANTHONY ALVAREZ SEE MORE OF THIS WEEK’S SNAPS ONLINE AT CRAINSNEWYORK.COM/SNAPS GET YOUR GALA IN SNAPS. EMAIL THERESA AGOVINO, [email protected]

22 | CRAIN’S NEW YORK BUSINESS | MAY 2, 2016 20160502-NEWS--0023-NAT-CCI-CN_-- 4/29/2016 7:37 PM Page 1

PHOTO FINISH

Union job sweepstakes n a brisk Monday morning last month, a long line formed outside the Long Island City headquarters of the painters union known as District Council 9. Many applicants had arrived at 6 a.m., only to find themselves behind hundreds of others hoping to join the union as apprentices who paint bridges. OAn open call like this offers the best shot at a union job, and with it a middle- class salary. Earnings start at $31 an hour and by the end of the three-year program can grow to $79 hourly—or $158,000 annually before overtime. Competition is stiff: The union handed out 500 applications for just 50 openings. Joe Sharkey, a second-generation union painter who kept the line moving, said the council had a waiting list to replace the many recruits who drop out. “Some guys just can’t handle the height,” said Sharkey, who has worked above the George Washington and Manhattan bridges. Mike Proios waited three hours in a collapsible lawn chair to get the 177th application. He was also hoping to hear from the iron or sheet-metal workers unions. “This is your best bet, but chances are slim,” said Proios, who currently works in screen printing, an industry that pays around $15 an hour. “That’s why any- O T A

M thing that comes out on the [union’s website], you go and put your name in.” A ’ D — PETER D’AMATO R E T E P

MAY 2, 2016 | CRAIN’S NEW YORK BUSINESS | 23 B:11.125” T:10.875” S:10.25”

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Grimm Brothers Brewhouse and millions of other small businesses use T-Mobile @Work for wireless with straightforward pricing and no overages, ever. You also get a 24/7 dedicated business account team that knows you and your company. Plus, we doubled our 4G LTE coverage in the last year to cover 308 million people, so you can get more done in more places.

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Limited time offers; subject to change. Part’g locations. Credit approval, deposit & $20 SIM starter kits may be req’d. Monthly Regulatory Programs (RPF) & Telco Recovery Fee (TRF) totaling $2.71 per voice line ($0.60 for RPF & $2.11 for TRF) and $0.98 per data only line ($0.15 for RPF & $0.83 for TRF) applies. Taxes approx. 6–28% of bill. Certain uses, e.g., some speed test apps, may not count against high-speed data allotment or have speeds reduced after allotment reached. U.S. roaming and on-network data allotments differ; includes 200 MB roaming. No overages for domestic postpaid, non-pooled use; pay-per-use charges may apply on some services (e.g., Pooled). Free Hotspot: Get 2 @Work Voice lines and 1 Mobile Internet line and get a ZTE Falcon Z-917 hotspot. Lines must be on same account; 1 offer per account. If you cancel wireless service, remaining balance on device may become due and rebate may be billed to your account if you cancel before 8/1/16. Allow 8 weeks. Card issued by Citibank, N.A. pursuant to a license from MasterCard International and managed by Citi Prepaid Services. Card expires. Coverage not available in some areas. Network Management: Service may be restricted for abnormal use or interference with our ability to provide quality service to other users, or signiﬁ cant roaming. Customers who use an extremely high amount of data in a bill cycle will have their data usage de-prioritized compared to other customers for that bill cycle at locations and times when competing network demands occur, resulting in relatively slower speeds. See T-Mobile.com/OpenInternet for details. See Terms and Conditions (including arbitration provision) at www.T-Mobile.com for additional information. T-Mobile and the magenta color are registered trademarks of Deutsche Telekom AG. ©2016 T-Mobile USA, Inc.

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