Crains New York - March 4, 2013 - (Page 7)

REAL ESTATE DEALS City’s largest building scores big lease A fter being slammed by Superstorm Sandy, Manhattan’s largest office building (by square footage) is making a comeback. Liberty Mutual has signed a 10-year lease for 120,000 square feet at 55 Water St. in a deal that doubles the insurance company’s footprint at the property. The transaction is another sign of the success that landlords of Sandy-stricken downtown buildings are having in persuading tenants to renew and, in some cases, even expand their offices. Price has something to do with that. The asking rents at 55 Water St. are in the $40s per square foot, which compares well with midtown and even midtown south. Harry Bridgwood, an executive at New Water Street Corp., which owns and manages the property, said that ownership has invested more than $200 million repairing the tower and stormproofing it. The work includes moving key infrastructure, such as electrical systems, to the building’s third floor. “We’ve invited tenants to see what we’re planning and the work we’re doing so they can be assured,” Mr. Bridgwood said. Brokerage company Cresa represented Liberty Mutual in the transaction. CBRE Group Inc. represents 55 Water St. in leasing deals. —daniel geiger BARE BONES Fairway gets fresh with Chelsea Fairway Market has signed a 20year lease for 26,000 square feet at 766 Sixth Ave. About 17,000 square feet are on the ground floor, with the remainder in the basement. The store will be at the base of a 33story apartment building called the Chelsea Landmark. “Fairway’s move is proof that the retail corridor on Sixth Avenue north of 23rd Street has matured into a true link between Herald Square and the Flatiron and Ladies’ Mile areas,” said Bruce Spiegel of Rose Associates in a statement. He and colleague William Bergman represented landlord Marine Estates in the transaction. The asking rent for the groundfloor space was $150 a square foot. When the store opens in the summer, Fairway will join the growing crop of grocers already in the area, including Trader Joe’s and Whole Foods. Gary Alterman of Robert K. Futterman & Associates and Allen Cooperman of Welco Realty represented Fairway in negotiations for the space. —adrianne pasquarelli 11 TIMES SQUARE 477 BROOME ST. 532 BROADWAY ASKING RENT; TERM: Undisclosed; undisclosed ASKING RENT; TERM: $700,000 per year; 10 years ASKING RENT; TERM: $800 per square foot; 15 years SQUARE FEET: 10,000 SQUARE FEET: 5,100 TENANT; REP: Kirna Zabete; David Baker of Isaacs and Co. TENANT; REP: Club Monaco; Robert Cohen of RKF LANDLORD; REP: JC Dwight; David Barreto of Cast Iron Real Estate LANDLORD; REP: Thor Equities; in-house representation by Joseph Sitt SQUARE FEET: 53,000 TENANT; REPS: eMarketer; Timothy Dempsey and Roger Griswold of CBRE Group Inc. LANDLORD; REPS: SJP Properties; Paul Glickman and Mitchell Konsker of Jones Lang LaSalle BACK STORY: The global information-resource company will occupy the 12th and 14th floors of the new office tower. BACK STORY: In an effort to expand, the fashion designer will take space split between a ground floor and a lower level, according to The Commercial Observer. BACK STORY: The apparel company will move to a smaller space just minutes away from its current SoHo location, according to The Commercial Observer. SMALL BUSINESS Firms that say no when VCs say yes BY MATTHEW FLAMM J ay Miletsky has only two investors in his online video startup, MyPod Studios, and recently one of them said he wanted the fast-growing, two-year-old company to grow even faster. The advice reminded the chief executive why he has never taken money from venture capitalists and has limited his investors’ combined stake to 15%. “I was able to say: ‘I’m happy to listen, but I’m simply not going to take [your advice],’ ” Mr. Miletsky recalled.“With a VC who had a larger investment, I couldn’t do that.” The Manhattan-based entrepreneur has the advantage of running a profitable company, which, he says, will more than double its revenue this year, to $20 million. But Mr. Miletsky is also representative of an increasingly vocal group of entrepreneurs who are adopting what might be considered the techindustry version of sustainable farming practices: spending only as much as they can afford, focusing on customers, being nimble enough to switch directions when products don’t take off and taking on as little investment as possible. The shift involves a fraction of startups: Very few of the thousands that launch each year last long enough to worry about VC funding, and most that do would be glad to take any money they can get. But longtime observers say that attitudes are changing as founders become leery of giving up control or accepting more money than they know what to do with. “What I’m beginning to see is a new group of entrepreneurs who are being much more deliberate about the size of funding they take and whether they take any at all until they see real growth in their business,” said Nicholas Chirls, who runs seed investments at Betaworks, a Manhattan-based incubator and seed-stage venture fund. These entrepreneurs, he explained,don’t want to end up like the ones who raised millions of dollars in recent years, failed to gain traction and now “are not sure what to do with the money or themselves.” In a recent blog post, Mr. Chirls described “the 2013 startup” as a throwback to a simpler time and a sign of more mature founders. Culture clash Other factors include changes in technology that allow companies to get started far more quickly and cheaply than ever before, and the growth of accelerators, such as Y Combinator, that help entrepreneurs with guidance and modest backing. Some insiders also talk of “an end to the VC era” as the IPO market vanishes and M&A exits become too small to sustain the millions poured into startups by the large venture funds. The 10-year return for VC firms, according to the Cambridge Associates U.S. Venture Capital Index,came to just 6.07% as of Sept.30, well below the Dow Jones industrial average and the Nasdaq Composite. The argument against taking VC money is also part of a long-running culture clash with roots in the media fervor over big-ticket exits and IPOs for companies with unproven business models. “It’s a lottery-ticket mentality— you need to get hundreds of millions of [VC] dollars and then cash out for a billion, and that was being presented as the only path to success,” said Matt Linderman, who used to champion bootstrapped startups on the website of business-software firm 37signals. “That’s not the case. You can build something small and sustainable and not have to sell off your business and soul.” The Brooklyn-based entrepreneur and standup comic (under the name Matt Ruby) recently launched Vooza.com, an ad-supported video Web series that satirizes, among other things, a dysfunctional tech startup’s quest for money. Experts caution that the changes in the tech ecosystem may not be as radical as they seem. “Everyone says it’s cheaper to build and launch things, but it still costs the same to JAY MILETSKY has limited his investors’ combined stake in his startup to 15%. buck ennis Some owners leery of giving up control of their startups U.S. private company, according to Basil Peters, author of Early Exits: Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists). “There are some smart people who are building a new generation of VC funds that are the right size to work with today’s startups,” Mr. Peters said. “Those funds will be much smaller.” market it worldwide and get customers,” said Bob Greene, managing partner of Contour Venture Partners and chairman of the New York Venture Capital Association. And despite some daunting statistics for the VC industry, he sees a healthy future for most firms, or at least those in New York.“The industry is going to go through a shakeout,” Mr. Greene said. “A lot of old firms will retire and new ones will get started. New York won’t see that shakeout because it never had those heritage firms to begin with, and the startup market here is so strong that those who invest wisely will do well.” Others concur, as long as investors stop shooting for the billiondollar exit and can make money from the $12 million to $15 million exit, which is the median range for a Different models He and others also see a place for investors who bring a lot more than money, including expert counsel, creative ideas and connections to other companies. Some entrepreneurs are turning to different models to find what they need. Since 2010, Josh Shabtai has been supporting himself as an advertising creative director while building his video game company lm/nl as part of bMuse. A sort of studio or accelerator that provides a collaborative work environment in its SoHo offices, as well as technical and administrative support, bMuse gave him under $1 million in financing in exchange for a large minority stake in his company. Mr.Shabtai met with venture capitalists before going with bMuse, but he couldn’t find the right ones.“I never felt I was meeting people who were genuinely interested in the product or really understood what they’d be investing in,” he said.“It seemed the relationship would be more focused on the return than on what we were putting out into the world.” Ⅲ To sign up for Crain’s SMALL BUSINESS newsletter, go to www.crainsnewyork.com/smallbiz. March 4, 2013 | Crain’s New York Business | 7 http://www.Vooza.com http://www.crainsnewyork.com/smallbiz

Table of Contents for the Digital Edition of Crains New York - March 4, 2013

Crains New York - March 4, 2013
IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
SMALL BUSINESS
REAL ESTATE DEALS
BUSINESS PEOPLE
OPINION
GREG DAVID
REPORT: 2013 ELECTIONS
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - March 4, 2013