Real Estate

Google makes Donny search

Who will blink first, Google or Donny Deutsch?

Deutsch’s ad agency has a lease that ends in 2013 for 140,000 square feet on the 14th and 15th floors at the now Google-owned 111 Eighth Ave. But it also has renewal options at a likely larger fair market rent, sources said. Loft rents for much smaller but cool spaces are already reaching $70 per foot a stone’s throw away in the Meatpacking area.

Google has been trying to buy out various tenants so it can expand inside the 2.9 million square-foot Chelsea block buster, which looms over the neighborhood and provides great light and air to its tenants.

Deutsch, therefore, has been conducting a space search to explore options through Rob Silver at Newmark Knight Frank. Both companies declined comment.

Other brokers say the search isn’t going so well, as the submarket is the tightest in the country and large suitable blocks are rare. According to a new report by Jones Lang LaSalle, 45 high-tech companies alone are looking for over 3 million square feet in Manhattan, and many of them are targeting Midtown South.

As Deutsch is known for believing that there’s a price for everything, we wonder if Google will make it worthwhile for the ad firm to move or if they will simply dig in their heels for the long run.

One space Deutsch hasn’t yet eyeballed, sources said, is the top two floors of 620 Ave. of the Americas along Ladies’ Mile that totals over 165,000 square feet.

A majority stake in that building is in contract to be sold to RXR Realty for $500 million through Douglas Harmon and Adam Spies of Eastdil Secured. Coincidentally, Harmon was the broker on 111 Eighth when it was sold to Google at the end of 2010 for $1.77 billion.

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The 275,000-square-foot garment center office building at 1370 Broadway is currently being marketed through the aforementioned Harmon and Spies of Eastdil Secured.

Sources said the building, one of the few still catering to fashion tenants, will likely sell for more than $130 million.

Sitt Asset Management purchased the property in 2003 for $57.18 million from SL Green Realty Trust. Since then, as values have increased, a $40 million mortgage was bumped to $60 million. The firms declined comment.

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After nearly three years of ups and downs, the Ashkenazy Acquisitions deal to buy the ground lease for 635 Madison Ave. has closed. The transaction was completed in mid-July for $60.78 million. Sources said the company also assumed some securitized debt.

Control of 635 Madison Ave. bumps the company headed by Ben Ashkenazy and Michael Alpert into first place as the largest retail owner in the area, with more than 400,000 square feet.

Holdings include the Prada store at 841 Madison Ave., the 600 Madison Ave. retail condo occupied by Barney’s and 650 Madison Ave. The company declined comment.

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Trump Palace, the luxury residential condominium at 200 E. 60th St. that was developed and sold out but is still managed by Donald Trump, is getting stiffed by the owners of the street retail condo that has the Food Emporium as its lone tenant.

Neither a local manager for the retail condo owner’s parent, Equity One, a Florida-based real estate investment trust, nor its investor relations contact would comment on the fact that its “Northeast Portfolio” owes the board $106,453 in back common charges since last November. Trump and the board’s attorney also declined to comment.

To preserve its rights, the Trump Palace board has just filed a lien on the 17,410-square-foot space. Property taxes of about $250,000 per half year appear to be up to date.

Equity One bought the condo in September 2010 for $21 million from the prior owners, R&J Co., which allowed it to pay off its own lien of more than $262,393 for charges from Nov. 2007 to Nov. 2008. Public records do not show whether the Providence, R.I.-based R&J owed or paid off further charges.

R&J is controlled by Josef Mittlemann, who was among Bernie Madoff’s victims along with other family members. An e-mail to his wife went unreturned, and he could not be reached.

The good news for area residents and condo owners is that they are not going to lose their grocery store. Food Emporium’s parent, the Great Atlantic & Pacific Co., says it’s paying rent on its lease, which public records show Trump first arranged in 1993 and modified in 1996.

The lease was extended and modified again by R&J in 1999, when it bought the condo from Trump for $11.18 million. That lease now expires at the end of January 2019, but has eight 5-year renewals equal to another 40 years. A&P also has a right to purchase the unit upon the same terms as another party.

Lois@BetweentheBricks.com