Tuesday, October 05, 2010

Empire State of Mind: How The Real Estate Industry Rocked Out This Summer

Note: This story appeared in the Aug. 25 issue of Real Estate Weekly.

On a breezy July evening in midtown, the band Young Veins belted out songs in front of an appreciative crowd that swilled complimentary wine and liquor. But instead of being crammed into a dive bar, the concert took place on the roof of the Atlas, a luxury rental building at 66 West 38th Street, with an impressive view of the Empire State Building.

The Gotham Organization, the developer of the building, began hosting the freeconcerts, which included an appearance by Lady Gaga last year, as a way of building a community and attracting tenants.

"It’s definitely a sales pitch," said Michael Morris of Concierge Service International, which books events for the Atlas. “I know the leasing agents love that we have these.”

As the music industry undergoes seismic changes, bands and labels look for alternative ways of marketing themselves and additional revenue streams. Meanwhile, developers, landlords and civic groups try to promote their buildings and neighborhoods by hosting live music.

The result has been a plethora of free summer shows, a boon for fans and a powerful marketing tool for both musicians and brokers. Butthe relationship between music and real estate is complicated, and interests don’t always align.

In West Chelsea, the Ohm, a new luxury rental, throws monthly concerts in its lobby, aimed at the younger tenants who frequent the nearby night clubs, which include the Highline Ballroom. The Knitting Factory books the Ohm’s shows, and past events have included performances by DJ Spooky and singer Nicole Atkins.

Ironically, these events are taking place as much of the music industry is being priced out of exclusive Manhattan neighborhoods. The Knitting Factory moved from Tribeca to Williamsburg last year, in part because the venue owners felt that the Manhattan neighborhood was no longer an appropriate setting.

But the collaboration between the Knitting Factory and the Ohm came, in part, from a desire to give the Knitting Factory brand a continued Manhattan presence. “There was a nice synergy in maintaining some sort of New York connection,“ said Seth Rosner of Nancy Packes Inc., which handles leasing for the Ohm.

The concerts seem to have paid off — the Ohm closed 50 leases in July.

But real estate and music haven’t always been seen as mutually beneficial. Gentrification has been blamed for driving artists outof traditional bohemian enclaves like Soho and the Lower East Side, and into more far flung areas such as Bushwick.

In the East Village, the birthplace of American punk, the iconic Tower Records space has been vacant for four years, but was recently leased by an Equinox gym affiliate. The Related Companies (which incidentally also owns Equinox) purchased the Virgin Megastore chain and proceeded to shutter both its Times Square and Union Square locations. At Union Square, the space now has a Nordstrom Rack and Duane Reade as tenants — not exactly rock‘n roll. (Citibank recently installed signs indicating it would take the remaining corner of the space.)

And, of course, CBGB is now a John Varvatos boutique clothing store, following a lengthy squabble between CBGB’s owner and 315 Bowery’s landlord over rent. But further downtown, relationships are more magnanimous.

In the Financial District, two major real estate players have spearheaded the neighborhood’s resurgence since 9/11. CB Richard Ellis was a founding sponsor of the River to River Festival, a summer series that brings free music, films, theater and dance to an array of venues in Lower Manhattan. It will celebrate its 10th anniversary in 2011.

At the World Financial Center, Brookfield Properties hostsevents throughout the year, some as part of River to River, including the annual Bang on a Can Marathon, an extravaganza of experimentaland world music that ran as long as 27 straight hours in 2007. Downtown has seena huge increase in its residential population since 9/11, and the emergence of live music, film screenings and public art has transformed the area below Chambers Street from a sterile office district to one that is closer to a mixed-use community.

“What we’ve sort of done is made downtown a cultural destination,” said Robin Schatell, executive director of River to River. “We want to be right there.”

One of most prominent events is the Seaport Music Festival at the South Street Seaport, which has hosted dozens of up-and coming bands, including the National, the xx, and Animal Collective, in the shadow of the masts of historic ships and beneath the F.D.R. Drive. The series has enjoyed press coverage from independent music blogs, the publications that would rarely have a reason to cover downtown before the festival.

A similar waterfront series, dubbed the Pool Parties, recently did turn sour though, highlighting the complexities of promoting and producing a free, satisfying concert series.

Jelly NYC, the small, local promoter of the shows, originally held the Pool Parties in the waterless McCarren Park Pool, but the city decided to turn the space back into a pool. This year, Jelly and the Open SpaceAlliance (OSA) collaborated to produce a concert series at East River State Park in Williamsburg, an effort that was heavily endorsed by Senator Chuck Schumer. (This was the second year in the location.)

The location of the concerts didn’t hurt the nearby 184 Kent, a 340-unit rental conversion, which is now over 65 percent leased.

Tenants in the building are attracted by Williamsburg’s culture, including the presence of live music, said Robert Scaglio, senior managing director at Rose Associates, which leases the building. “Even in the soft economy, the demand has been rising,” he added.

But on August 18, OSA announced that the final concert of the season was canceled, because Jelly had failed to pay fees for the last show, setting off a public squabble over the handling of the series, and throwing shows in future years in doubt. Putting on live music is, after all, a fickle business.

“It’s absolutely critical to us that theseprograms continue in the neighborhood,” said Stephanie Thayer, director of the OSA. "We’re firmly committed to seeing free programming continue. How we accomplish that next year remains to be determined.”

She hopes that such programming could include acts beyond indie rock, for example a performance of the Philharmonic with a rock support act.

“I’d love to see grandparents bouncing the grandkids on their knees and see a hipster three feet away at the same show.” said Thayer.

Smaller closures have also happened this summer. An open space at 400 Carroll Street in Gowanus, called the BKLYN Yard, was closed abruptly after the landlord terminated the lease of the promoter, MeanRed Productions, displacing a variety of events includingthe Sunday Best parties.

New York is a city that is largely definedby a lack of space, and live music thirsts for a venue to present itself. In a new luxury building that lacks an identity, live music can provide a template that attracts tenants. In an area like the Financial District, an infusion in culture can transform the nature of a neighborhood.

Ultimately, though, music’s presence is influenced by the same financial forces and business interests that shape the entire city.


Coda: The last pool party did happen, thanks in part to the real estate developers that developed the Edge, adjacent to East River State Park. It remains to be seen what will happen next year with the Pool Parties and River to River, but they definitely made their mark this year.

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