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Workmen have finally removed the last of the scaffolding from 750 Seventh Ave. The exterior lighting has been completed. And Newmark Real Estate Services is gearing up an aggressive leasing campaign now that the 580,000-square-foot building is out of bankruptcy.
"The building has been shined up and it's ready to go to market," says William G. Cohen, Newmark executive vice president. "Now that the stigma of bankruptcy is removed, this building will lease rapidly."
But the success of the leasing program will depend largely on whether 750 Seventh's new owner --a group of banks led by Citicorp--can compete in the toughest office market in decades. Real estate experts note that institutions traditionally have lacked the entrepreneurial instincts and quick decision making to lease space effectively.
The difficulty will be even greater when, as is the case with 750 Seventh, the property becomes owned by a group of lenders thrown together by unexpected circumstances. Diverse players with different capital pressures and goals suddenly have to agree on such bottom-line issues as rent and the value of tenant incentive packages.
"These are not marriages that are made in heaven," says Steven H. Shepsman, managing partner of Kenneth Leventhal & Co.'s New York office.
Nevertheless these forced marriages will be seen more frequently in the New York real estate market. Numerous prominent office buildings are in varying stages of bankruptcy or foreclosure likely to culminate with lenders taking ownership. Included in this category are 1585 Broadway, 135 E. 57th St., 1 Times Square, 633 Third Ave. and 850 Third Ave.
"You're going to see a large percentage of assets converted to institutional ownership," says Michael P. Buckley, Ernst & Young's national director for real estate...