MAG Partners to redevelop Chelsea corner

MaryAnne Gilmartin’s development firm struck a deal to redevelop a corner site on Eighth Avenue in Chelsea. 

MAG Partners signed a long-term lease with a sprawling, multi-block affordable housing complex for a dilapidated retail building at 335 Eighth Avenue, The Real Deal has learned. The firm plans to redevelop the site into a mixed-income apartment building with a grocery store and community space. Construction is expected to start in 2022.

The seven-story project will qualify for the Affordable New York program, with 30 percent of the approximately 200 set aside as affordable.

The Penn South complex in Chelsea was facing a conundrum as its 60-year-old retail building on the northwest corner of West 26th Street and Eighth Avenue needed significant repairs that the low equity co-op could not afford.

At the same time, leases with current tenants — Gristedes, McDonald’s, a tennis center and other services — were set to expire, meaning the co-op was facing a substantial drop in income. As a result, its 2,820 apartments would be due for a $500 monthly increase in maintenance fees.

The board had hired Paul Travis of Washington Square Partners as its real estate advisor in 2008 and he provided several options. Earlier this year, the co-op’s 5,000 residents voted to create a 99-year lease on the property so the rent payments would replace the lost income.

“The top priority for the Board of Directors is to preserve the affordability of Penn South for current residents and future generations,” Ambur Nicosia, the board’s president, said in a statement. “We needed a solution that does not require our shareholders to pay major increases in monthly maintenance fees. The stores are supposed to subsidize the apartments, not the other way around.”

After interviewing and getting bids from seven developers who specialize in such projects, the board agreed to lease the site to the woman-owned MAG Partners.

“They want to build affordable housing and do the right thing,” Gilmartin, CEO of the firm, said of the co-op board. “They were concerned about the views [of current residents] and space around the new building.”

Her company is currently constructing a similar but larger project at 241 West 28th Street, on land owned by Edison Parking. “The [board was] watching from afar and saw how we designed the building,” Gilmartin said.

The architect of the West 28th Street building, Rick Cook of COOKFOX Architects, will also design the Penn South project with an eye on the red brick of the 10-co-op buildings and the historical character of Chelsea.

“Obviously, it’s an incredible perch,” said Gilmartin of the site and the possibility of a roof deck for the occupants. “It’s something we will study and also the placement of the building, and then go back to show it.”

During her tenure at Forest City Ratner, Gilmartin oversaw the development of the New York Times Building on West 41st Street, the Barclays Center in Brooklyn and the Frank Gehry-designed 8 Spruce Street residential tower in downtown Manhattan. She also recently helmed the real estate investment trust Mack-Cali through a transition period.

Gilmartin announced the launch of her firm in December 2019. In addition to the 28th Street project, MAG is the development partner on a 6-acre development in Long Island City.

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MAG Partners Selected to Develop Residential Co-op in Chelsea

MaryAnne Gilmartin’s MAG Partners has been tapped to redevelop 335 Eighth Avenue into a mixed-income apartment building with ground-floor retail space, the developer announced Thursday.

Penn South, an affordable housing cooperative based in Manhattan’s Chelsea neighborhood, selected MAG Partners for the 200-unit development that will be built under New York state’s affordable housing program, with 30 percent of its units reserved for low- and middle-income residents.  

MAG Partners will develop and operate the seven-story building under a long-term ground lease with Penn South. A grocery store and other retail stores are planned on the ground floor, with construction slated to commence in 2022.

The Real Deal first reported the selection of MAG Partners. 

“It is an honor to partner with Penn South and join their long legacy of community-building in Chelsea,” Gilmartin said in a statement. “We are committed to building in a way that enhances this beautiful neighborhood and provides value to the co-op’s long-term sustainability.”

Paul Travis of Washington Square Partners provided real estate advisory services to the co-op. Susi Yu, principal and head of development, led the deal for the MAG Partners team. 

MAG Partners chose Rick Cook and COOKFOX Architects to design the building with plans to bridge the historical character of Chelsea. The developer is also currently working with COOKFOX on the nearby 241 West 28th Street, a 480-unit apartment building slated to finish construction in late 2022.  

Ambur Nicosia, president of the Penn South co-op board, said in a statement that the deal will replace a commercial building that required huge repairs and provide revenue “to preserve the affordability of Penn South. We needed a solution that does not require our shareholders to pay major increases in monthly maintenance fees. The stores are supposed to subsidize the apartments, not the other way around.”

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#50 MaryAnne Gilmartin

MaryAnne Gilmartin gives new meaning to the term “multitasking.”

In the space of nine months, the seasoned real estate developer entered and exited as Mack-Cali Realty Corporation’s interim CEO; launched her own firm, MAG Partners; got a development deal in Chelsea off the ground; and formed a strategic partnership targeting $3 billion in future deals.

Gilmartin earned her stripes at Forest City Ratner, climbing the ranks to CEO, a position she held for four years, and then formed L&L MAG with David Levinson and Robert Lapidus in 2018.

In July of last year, after a shakeup at Mack-Cali during which the CEO resigned, Gilmartin, who was on the board, took over as interim CEO. Gilmartin was confident she could turn things around at the company before handing it off.

“It’s not what I wanted to do when I grew up,” Gilmartin joked. “It’s not what I saw myself doing because of my partners, and my team, and [MAG Partners] being my first love.”

During her time as CEO, in her words, Gilmartin “upskilled the talent,” “pruned the organization,” and “revamped the leasing strategy” on Mack-Cali’s massive Jersey City waterfront project, bringing in a new leading head, and Mary Ann Tighe to consult on the project.

But lest we forget about MAG Partners, Gilmartin completed the buyout of her L&L partners in 2020, and made moves on her first standalone deal: a 479-unit multifamily development in West Chelsea, a site acquired and planned during the L&L days.

Gilmartin was actually close to closing on a construction loan for the site in early 2020, but the lender pulled back once COVID hit. Gilmartin decided to push ahead and find other sources of capital. She brought in foreign investors Atalaya Capital Management, Safanad and Qualitas as partners, and closed on a $173 construction loan in October. “It was pretty binary,” she said. “It was like, do you believe in New York City?”

That being said, Gilmartin is beginning to look to other cities where she can replicate some of her previous work in “placemaking” projects — large, mixed-use, urban development — such as Barclays Center and MetroTech in Brooklyn. “We like to say we’re placemakers, not developers,” Gilmartin said.—C.G.

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The Biggest Jumps of Power 100

MaryAnne Gilmartin is no stranger to Power 100. Not too long ago, she had been running Forest City Ratner Companies as CEO and president, where she developed The New York Times Building, the Frank Gehry-designed Spruce Street apartment tower, and Barclays Center, among other city gems. She left to start a development company with Rob Lapidus and David Levinson, and then decided that she could get all the funding that she needed on her own, so she bought out her partners.

Hence, MAG Partners.

It could have been very, very unfortunately timed, but Gilmartin wowed. Yes, at the beginning of 2020, one of her construction lenders pulled back from a loan, but she deftly managed to secure foreign investors. At the same time, Mack-Cali, where she was on the board, asked her to take over as interim CEO after the real estate investment trust pushed out the full-time one. 

She trimmed the REIT’s fat, revamped its leasing strategy, and brought in new people, restoring confidence at the New Jersey-based company.

That’s the kind of year that’s worth a major jump in the ranks, so Gilmartin slid up 22 spaces — our second-biggest jump of 2021. (The biggest was the leaders of Taconic, who went from 54 to 25, thanks to huge investments in life sciences.)

Unlike in previous years, there were very few shakeups. A lot of the Power 100s moved up or down a little (and a significant number were left off the list entirely).

As we do every year, a lot of attention is devoted to the smaller, but significant shifts.

JLL’s Peter Riguardi has always been one of the very best brokers in the city. … And we always felt that his ranking (last year, he was 22) indicated that. But, given the hustle and the 2.5 million square feet he leased during the pandemic, not to mention his work with clients in finding real estate around the country, it was worth moving him into the teens.

Tommy Craig was likewise a very respectable number 26 last year. But given that Hines, the New York-area operations of which Craig leads, had invested in One Vanderbilt and One Madison, was building luxury senior housing on the Upper East Side, and had taken on 5.5 million square feet of Ivanhoé Cambridge’s portfolio — which is not even mentioning their work in the Hudson Valley, and industrial development in Pennsylvania, and Hudson Square and … well, you get the idea. Craig broke into the top 10.

Last year, Rob Speyer was a highly respectable number 12. But given Tishman Speyer’s sudden hunger for SPACs (call it a “SPAC attack”?) and how much of the real estate world seems to be following suit, we felt that he should go even higher. How does number five feel, Mr. Speyer?

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NOTABLES IN REAL ESTATE 2021

MaryAnne Gilmartin

Co-founder, chief executive officer, MAG Partners

After leading the efforts to build the Barclay’s Center, MaryAnne Gilmartin is now running her own firm. Gilmartin is the founder and chief executive officer of MAG Partners, which she spun off from L&L MAG last year. MAG Partners is creating a 480-unit residential building in Chelsea. Gilmartin was previously the president and chief executive officer of Forest City Ratner Companies, where she oversaw a period of game-changing development. In addition to the Barclay’s Center project, at the center of the $4.9 billion, 22-acre mixed-use Pacific Park development, Gilmartin was in charge of the construction of the New York Times Building, designed by architect Renzo Piano, and the Tata Innovation Center at Cornell Tech, among other projects.

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MAG Partners, Safanad form new joint venture

MAG Partners will bring the development experience, and Safanad will bring the capital.

That’s the setup of a new joint venture between the companies, which is targeting $2 to $3 billion worth of deals, the firms told The Real Deal. Eventually, the joint venture will pursue ground-up development, but in the short-term, it is looking at distressed properties and projects, as well as building conversion opportunities.

The companies are already working together on a 479-unit rental building at 241 West 28th Street in Chelsea. The firms, along with partners Atalaya Capital Management and Qualitas, secured a $173 million construction loan for the project in October.

MaryAnne Gilmartin launched MAG Partners, a spin-off from the firm she formed with L&L Holding’s David Levinson and Robert Lapidus, in December 2019. Gilmartin noted that while her priority since leaving Forest City Ratner in 2018 has been new development, the pandemic has shifted her focus. She described the new arrangement —which will acquire sites and pursue deals as a general partner — as “MAG Partners fueled by Safanad.”

Safanad, a private equity firm that launched in 2009, tapped Oxford Properties Group’s Andrew Trickett in 2018 to help grow its New York real estate operations. Trickett called the joint venture with MAG a “convergence of capital and expertise.”

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Gilmartin confirms ‘interim’ CEO tag, says there will be new day-to-day leadership at Mack-Cali in 2021

Mack-Cali Realty Corp. interim CEO MaryAnne Gilmartin talked about the past, present and future of the real estate investment trust Monday during a webinar. And, while she said she will continue to have a major role in the company, Gilmartin made it clear that she does not intend to remove the “interim” tag from her title.

“I’m not 100% clear on the timeline, but in 2021 there will be new day-to-day leadership inside of Mack-Cali and I will go back to being chair of the board,” she said.

Gilmartin, who has stepped away from her job as founder and CEO of MAG Partners in New York City to run Mack-Cali, talked about where she saw the Jersey City-based REIT going during a lunch-and-learn webinar moderated by Mary Ann Tighe, CBRE’s CEO for the tri-state area. It was hosted by CBRE Vice Chairman Jeffrey Dunne and CBRE Executive Vice President Jeremy Neuer.

“My decision to serve as interim CEO was not something I anticipated doing,” Gilmartin said. “I was convinced of it when I was asked by the board to do it because it had a timeline associated with it.

“I knew that it was a bit of a rabbit hole and would require substantially all of my time, but that it wouldn’t be something like Hotel California — you can check in, but you can’t check out.”

Gilmartin said she remains committed to Mack-Cali — and that serving as interim CEO will allow her to do a better job as chair.

“My commitment to the company is solid,” she said. “I’m deeply loyal to the team. And I believe, as chair, I will be able to serve people and the shareholders effectively and mightily because I’ve been the interim CEO.

“The nice thing is, I’ve had the opportunity to do this. I will be able to stay with the story and see it out through its completion, and I also get to go home again to my team at MAG Partners, where we have a capital source, we’ve got a building on 28^th Street that we’re coming out of the ground building in West Chelsea and we see lots of opportunity through the pandemic.”

Gilmartin said she sees similar opportunity at Mack-Cali.

“I guess the safest thing I can say is that changes are afoot and that we are not going to look the way we look today in three years, if we have anything to say about it,” she said.

And, while it’s no secret that the firm wants to sell off its suburban assets, Gilmartin said there will not be a fire sale — regardless of what public pressure the company may face to do so.

“Selling segments in the business or (joint venturing), or bringing in new capital, just for the sake of satisfying the rally call for change, is not wise,” she said. “You can’t run the company based on what the analysts are saying has to happen. You basically have to look at the company and say, ‘We definitely need to change it up a little bit.’

“Selling suburban is a strategy to make the balance sheet simpler and to produce proceeds so that we can shore up the balance sheet and increase liquidity and reduce debt — those things make a ton of sense. And I believe, all through 2021, we will sell a billion dollars of assets and that will make a meaningful difference on the company’s bottom line.”

That would make for a different company, too.

“You’re left with a residential business that is robust and has extraordinary value,” she said. “And we can keep doing that. We can supersize that portfolio and be a bigger, better version of ourselves. And/or we can be a commercial company that extracts the value that we know exists on the waterfront and we could JV with other commercial operators and owners and be a bigger, better version of ourselves as a commercial landlord. I think either of those two things are possible.

“Having two businesses — a residential business and a commercial business — is a really nice story of diversification, particularly if it’s mostly urban. So, I don’t see it impossible that the company is a commercial and residential landlord. But it has to have a healthier balance sheet, has to have better execution and it needs to have access to greater sources of capital.”

No. 9: MaryAnne Gilmartin; Commercial Real Estate Power 50

Gilmartin was appointed interim chief executive officer at Mack-Cali in July 2020 with the firm dealing with activist investor Bow Street Capital. The dissident investor had been trying to elect its own slate of directors to Mack-Cali’s board.

Since taking the helm, Gilmartin has made several strategic deals to help, one of the largest landlords in New Jersey, refocus on more valuable waterfront properties.

She has put together a new team to orchestrate a transformation at Harborside, its mixed-use office campus in Jersey City. The group of professionals, consisting of newly hired experts and internal leaders, will facilitate the repositioning, leasing and marketing of the 4.3 million-square-foot property along the Hudson River.

Gilmartin has become a champion for women in the industry and recently founded her own company, MAG Partners, which just announced plans for a new residential development in Manhattan.

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Chelsea strip could hold clues for health of Manhattan development

It’s tucked away, low-key, and a bit rough. But West 28th Street between Seventh and Eighth avenues in Chelsea may hold clues about the mid-pandemic state of development.

The industrial stretch is the site of a handful of major projects, residential and commercial, that appears to be going full steam ahead even as others tap the brakes.

“These seem like tougher times than the last recession,” said Jana Angelakis, who is trying to sell her two-bedroom, two-and-a-half-bath condo at 261 W. 28th St. Since listing the unit last winter, Angelakis has cut its price four times, to $1.7 million from $1.8 million, while also offering it as a rental at $6,250 per month. “But it’s exciting to see what’s happening on this block.”

Of all the new developments, the one with the most immediate risk, perhaps, is the Maverick, an 87-unit, 20-story condo at 215 W. 28th St. Sales begin at year’s end, which will test the area’s luxury appetite.

Though officials have yet to approve prices for the project, which is from developer HAP Investments, they should average $2,400 per square foot, or starting at $1.2 million for one-bedrooms.

In comparison, new one-bedrooms in Chelsea now list for an average of $2.1 million, according to StreetEasy.com, with one-bedrooms averaging $1.3 million.

“Time has worked against me” with the project, which missed the peak condo market of 2016, said Eran Polack, HAP’s chief executive officer.

The Maverick also features a 112-unit rental portion, with an entrance at No. 225, that was conceived as a hedge against a softening condo market even before coronavirus hit; it will begin leasing this winter. Both the condo and rental will share a pool, saunas and a roof deck.

Other projects are right behind it, like 28&7, a boutique 11-story office building from GDSNY at 322 Seventh Ave., which will open in 2021. Whether the work-from-home trend impacts its leasing remains to be seen, brokers say.

And this month, ground-breaking occurs at 241 W. 28th St., a 479-unit rental planned from MAG Partners.

This fall, MAG turned not to a conventional bank for financing but a private equity firm, Madison Realty Capital, which lent $173 million. 

“As major tech companies continue to sign big leases within walking distance,” MaryAnne Gilmartin, MAG’s founder, said, “We expect to see very strong long-term demand.”

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MaryAnne Gilmartin; Founder and interim CEO at MAG Partners and Mack-Cali Realty

How flexible are you with negotiating rents?
We are currently repositioning Mack-Cali’s Harborside campus in Jersey City, where we have great office space with million-dollar views available to companies looking to control their full environment post-COVID-19 [pandemic]. For those willing to come across the river, it is an amazing value proposition.

Has your “dead to me” list grown?
Yes.

Are you in the market for financing?
Yes.

What would be the signs that things are NOT going to improve in 2021?
I am watching what happens with schools very, very closely.

What do you think will NOT go back to normal?
Only eating indoors. The new outdoor perches for dining in New York City are amazing — thankfully, that silver lining that is here to stay.

I also think residential builders and operators will capitalize on the [work-from-home] phenomenon and innovate with more outdoor spaces and working-from-home services.

Who do you like for mayor in 2021?
That’s a tough one. I am still waiting for a true civic hero to step up. In the decency and humanity front, I do want to commend Corey Johnson for being so human and honest, something we don’t see enough in politics.

What do you think the city and/or state should do to help both real estate and the city?

The mayor needs to start speaking up and stepping up for long-term growth and development for our city. While budgets are tight today, we need to continue to work to increase the competitiveness of New York City with strategic thinking and planning.

How do you think the November election will affect real estate? How do you see a Trump win? How do you see a Biden win?
A Trump win would be another blow to great American cities — and the New York region is atop that list. Biden’s road will be long and hard, but it will recognize the importance a prosperous tri-state area holds for the country and the world.

 
LIGHTNING ROUND
Where’s your apocalypse bunker? 

My rooftop in Park Slope.

Did you gain or lose weight during quarantine? 

Held steady with a lot more effort!

Sourdough bread, banana bread, other? 

Sourdough

Which TV show have you binged? 

News-binging got in my way.

What restaurant did you go to when restaurants reopened? 

North Fork Table

Where did you quarantine? 

North Fork with my kids.

Biden, Trump or Kanye? 

Biden

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