Podcast Ep.2: Building Repositioning in NYC
To build new or transform the old? Join Jason Vesuvio, vice president of core and shell firm Pavarini McGovern, as he discusses building repositioning in the ever-evolving landscape of New York City.
Rob Leon: Welcome to Building Conversations, a construction podcast powered by the STO Building Group. I’m Rob Leon, I’ve spent the last 30 years of my career in the construction industry, and today, I’ll be your host. On this episode, we’re talking about one of the construction industry’s hot topics: Building Repositioning. Here with us today is vice president of Pavarini McGovern and fellow native New Yorker, Jason Vesuvio. Welcome, Jason.
Jason Vesuvio: Hi Rob.
Rob Leon: How are you today?
Jason Vesuvio: Good, how are you?
Rob Leon: So we’ve known each other for many years. Uh, we’ve worked in different offices together. You’ve been in and out of Structure Tone. Tell us a little about your career and uh, and your current role here at Pavarini McGovern.
Jason Vesuvio: Sure, actually I started at the Structure Tone organization 20 years ago this year, out in the New Jersey office. We were in Lyndhurst at that time, where you and I ended up crossing paths a couple years later. I spent some time at Pavarini McGovern our business unit, Pavarini McGovern, which is our core and shell business unit. Um, we mostly build the new stuff and as we’ll get into, reposition some buildings as well. Um, spent seven years there, left for a little while and then came back about three years ago.
My current role is vice president of business development. In the role, I also oversee marketing on a broad level and also our a virtual design and construction team. You know, most of my experience has really been on the side of the business of business development and marketing. You know, really the kind of the behind the scenes or the client-facing stuff, not so much on the delivery—although I did spend a couple of, a couple of moments, I’ll call it in my career as a project admin, project manager and even account executive later on in my career. So I had a little insight into that side of the business as well. But most of it’s been on, on the marketing and BD side.
Rob Leon: So, we’ll backtrack a little bit. So what did you do in college? Like what did you think you would do? Uh, and how did you end up doing construction?
Jason Vesuvio: Well, I can’t really remember back that far. Um, I actually, uh, I majored in English literature, so I always liked to read and write basically, which ended up lending itself very well to being in marketing and business development because it’s about different forms of communication. And although I minored in history and probably should have minored in marketing, I did have enough of an interest where, you know, I had, I had part of my brain there, trained on that sort of thing and I didn’t really know what that meant. Um, so I spent a little bit of time actually in an eyewear company doing some marketing-type stuff on the merchandising side. So I wet my whistle a little bit. And um, through a recruiter I had an opportunity to interview with Structure Tone and really find out what the, you know, the, I’ll call it the white-collar construction world is all about.
And it really opened my eyes and my first boss at Structure Tone was amazing. She taught me to read blueprints—because that’s what we call them—within the first couple of months so that I could write descriptions and that really hooked me in because now I, it was a real challenge because it was something that I didn’t really understand and I needed to use, you know, this ability that I’d cultivated over a few years as a kid and now use that to help this company win work. Um, and it was kind of a huge responsibility for, you know, for a young person and you could say that I haven’t really looked back.
Rob Leon: Right, right. That’s great. That’s great. So you know, we’re here to talk about building repositioning. How would you define building repositioning and what qualifies a project as building repositioning project?
Jason Vesuvio: I mean, I think this was really subjective. In my mind, it’s something old becoming something new and some of those, some of those examples are very dramatic. You can turn an industrial building, like manufacturing into residential. You can turn an old office building into a hotel. You can turn an old warehouse building into a lab. Those are examples of actual projects that our organization, whether it be Structure Tone or Pavarini McGovern are doing right now or have done recently, those are easy.
Some of those that I would categorize as building repositioning, we would talk about in years past as gut reno, adaptive reuse, and I think it’s all under the same family. But when I think you reposition an office building, it’s more than remaking a lobby. It’s really about turning maybe a Class B or C into a Class A, because that means more. A lobby would be part of it. You know, uh, reskinning a building, that’s part of that. To the extent that you can, maybe you redevelop the core, maybe you’re even ripping out mechanical systems, you know, those dramatic things coupled together to turn a B into an A or an affordable residential building into a market-rate luxury, that kind of thing falls into the same category as well.
Rob Leon: So, it’s kind of like taking a—from a, from a developer’s point of view, from a building owner’s point of view—taking, you know, the building and saying, “I need to attract new, different types of tenants,” right? You know, the, the law firms are, they’re, whatever, they’re growing, they’re leaving, you know, they’re just looking for different space. But we want to take this building and make it more attractive to a different type of organization, different type of company to get them in.
Jason Vesuvio: Different tenants, different inhabitants, different guests if it’s a hotel. But I, I do think that there’s, there’s something going on as well. And I don’t know if it’s deliberate, but you can, you can kind of see it happening. And I think you can hear it in conversation with, um, from client to client, and that’s really about authenticity. I think it’s a generational thing for sure. And I think that’s one of the things that the younger generation of millennials are kind of pushing us toward. You know, that old and new together has to be more than just, pardon the expression, just a facade. It’s got be authentic.
So, you know, having, um, something new pop out of something old, like we’re doing at 441 Ninth Avenue at the corner of West 34th Street. That’s a great example of a project like that. You know, we’re, we’ve got an existing podium, we’ve gutted that we’ve put in a new core and then a new tower above. And that project has a certain amount of authenticity to it because within the podium you get this feeling that you’re in a building that’s decades old. But with the expanded window program, there are better views. You have column spacing that no one would really design a building that way today. So you feel like you’re in something that’s real in a sense, but you’re surrounded by, whether it be technology or better views, you’re surrounded by something new and it’s that combination.
Rob Leon: Absolutely. I think that, um, you know, we’ve seen this over the years. Uh, you talked about authenticity. You know, people call it the “Chelsea look,” right? Wanting to keep concrete floors with all of the nooks and crannies and keeping the brick walls and possibly exposed ceilings, you know, chop the concrete out of beams and paint the beams, you know, they want to see that.
But they also do want the modern part of it, whether it is technology, whether it is the floor layout, whether it is the views, right?
Jason Vesuvio: Yeah, there’s something old and something new always being offered in these projects. But I think it’s also about technology clients for the, you know, for our clients, for the developers, uh, for the landlords. You know, that these are the types of buildings that folks in the technology world, they’re really looking for. You know, again, they want modern amenities and they want modernism from a technology standpoint. And I think there’s something that’s kind of cool, a juxtaposition of a modern, technology company that also wants something that’s authentic, something that’s old, something that had been there for, you know, generations or decades before.
And then I also think that flexibility is a big part of that. Uh, one of our office clients likes to say that a smart building is a flexible building. Not necessarily talking about the repositioning of a repositioning, you know, decades down, but you know, as things change and the new facility matures, the ability to change and adapt and be flexible without doing another major overhaul. That I think is also another theme that’s kind of built into building repositioning is the flexibility of the spaces. The flexibility of the systems.
Rob Leon: Right. And I think that has to come into play to the financial model too, right? Because if you’re saying, you know, hypothetically, you have a building that’s 300,000-500,000sf and you’re going to take out certain floors, you take out a certain amount of square footage to provide common amenity space and also thinking that, well, I might have that mix of sole tenant space with common amenity space change possibly.
You know, the model internally of saying, “Well, you know, what’s my lease going be like with that tenant,” right? It’s not just tied to the square footage that they’re renting. It’s got to be the square footage that their renting, plus whatever amenity/common space that they’re using. And is it, uh, is it built into the rent? Is it a usage fee? So, it’s a real interesting thing that the landscape of many different things are going to change because of the design, construction, repositioning of physically the building. Other things have to follow as well.
Jason Vesuvio: That’s a great point.
Rob Leon: Let me ask you, how important do you think, you know, the neighborhood play is? Like do you think it’s easy to just say, well I’m going to take this one building in the middle of wherever it is, you know, when the neighborhood is not being repositioned, how important do you think that the neighborhood is in that whole repositioning process to attract the right tenants?
Jason Vesuvio: I mean that’s a great question, and usually by the time, you know, we’re involved, someone has already answered those questions—whether it’s been through rezoning, opportunity zones or the “next big thing.” You know, there are folks that are looking at that pipeline, so to speak, much earlier. But I definitely think neighborhood plays into it. Some of it though is kind of, before you reposition, it’s a reimagination, you know, what do we want East Harlem to be? Whoever those people are that are the, you know, sort of the caretakers, purveyors of East Harlem for instance, which might be, you know, the next neighborhood or, um, you know, the next Bushwick or Long Island City, if you’re talking about the burrows. There are people who almost anoint that, but there are reasons that they do.
You know, here in New York or any urban environment, you’re probably ticking off a number of factors like connectivity to the subway or multiple subways and, you know, a few other things like that. But I do think that one of the things that’s interesting, especially about four 441 Ninth being repositioned where it is, is that, you know, Hell’s Kitchen had a completely different life years ago and it’s really what’s happening with Brookfield at Manhattan West and Related at Hudson yards that are kind of driving the repositioning that way. So in a sense that’s kind of, it’s kind of a unique creation. We’re going to make a neighborhood where there wasn’t one, we’re going to build a neighborhood over some tracks and then that ended up driving repositioning projects. So I think location obviously is very important. I think it shakes out, you know, in a number of different ways.
Rob Leon: No, I agree. I think, I don’t know if Hudson Commons would be happening if Hudson Yards wasn’t there, right? And maybe even this building that we’re in now, you know.
Jason Vesuvio: That’s true.
Rob Leon: You don’t know. And sure, you know, this location is great because it’s right by Penn Station, it’s near Port Authority. So there’s other reasons, but a huge driving force has to be the Hudson Yards development that’s happening there.
Jason Vesuvio: Without a doubt.
Rob Leon: So where would you say that the, uh, the next hot neighborhood is? You mentioned East Harlem, uh, we’ve talked about Third Avenue, that corridor, you know, the, uh, the building of the Second Avenue subway. What’s your take on where you think the next, uh?
Jason Vesuvio: I mean, the big one to shake out right now is Midtown East. You know, it’s going to taken a long time. I mean, it’s probably 15 to 20 year thing. You know, and then of course we’re going to go through, you know, various economic cycles and that’s going to play into it. But you’re already seeing the results of that rezoning with One Vanderbilt and some of the other big projects that they’re going to plan, and repositioning is always a part of that.
In fact, one client of the organization’s, RXR, I think saw the writing on the wall early at 237 Park and started to do some of their own, I don’t know if it’s a full repositioning, but they definitely did some major upgrades there—you know, planning for that, a lot of competition coming. So I think that’s really the big one.
One of the neighborhoods we’re starting to see transform over in the boroughs is Greenpoint. I mean there’s a tremendous amount, probably a dozen or so buildings, maybe 13 buildings, that are going to go right along the East River and the developer there is maybe, you know, 30-40% in with a couple more projects planned to go on the ground this year. And you know, that’s all new construction. But that’s really changing the neighborhood. And probably going to start driving repositioning to the east.
Rob Leon: It’s interesting, so you know, we are seeing this in other cities as well, right? And it used to be that you had to be on the island of Manhattan, and between certain streets—below 59th street, above 23rd street or whatever, and then in the quarter. That’s where you had to be. But we are seeing businesses go to the outer boroughs because that’s where people can afford to live. We see it in Austin, Texas. That is not only Austin itself, but north of Austin is being developed. We see it in Chicago, right? Stretching outside of downtown Chicago, we see it in London, across the river by Sea Containers and that neighborhood. It’s pretty amazing.
You know, you look at the age of a lot of the buildings and the infrastructure we have here in New York City and you wonder, how long do we have to stay on top and what do we have to do, right, to maintain that because we are building so much. I mean it’s just amazing of what could have happened, let’s say with Amazon, right? In Long Island City. Whether you’re pro or against, you know, what you probably couldn’t ignore is the fact that there would have to have been so much infrastructure built in and around that area to support that. And that drives a lot of the public works that I think we need it. But it’s interesting about like where the powerhouse companies are looking, it would have been a no brainer.
Jason Vesuvio: The talent pool here is, I mean, you know—you know what it’s like when you live and work in, and you’re from New York or the area, you always think of, you know, New York is the greatest city in the world. Um, but you know, top three talent pool in the world, right? I mean, to use your expression, it is a no brainer that companies would want to come here, especially technology companies. You know, this city, while there’s certainly an affordability question, um, people still want to come here. They want to make their mark, they want to be a part of what’s happening outside of work, but they want the whole experience here, right? And that’s really important for companies. We’re lucky in that sense as a city that folks like Amazon and then it can really only trickle down from there, you know, the Google’s, Apple’s of the world that are all in that same pot, want to come to us.
Rob Leon: Absolutely. Talking about checking all the boxes, right? So that’s not just for the developer thinking about where to put a building, but people and where they want to live. People want to live in a city, right? The things that we have to work on are modernization, and that leads to that whole building repositioning piece of how that ties in.
So, I’m excited because you know, again, native New Yorker, I love to see our city go through all the changes. Um, so one of the exciting projects that you and I have talked about is TSX Broadway, which is the repositioning of that location, uh, with the Palace Theater. I’d like you to talk about that because to me this is one of those interesting plays on what a developer is doing, because it’s got retail, it’s got culture, it’s got a theater, and it’s got a hotel, I believe. So, walk us through that project.
Jason Vesuvio: Sure, this is one of my favorites. I mean, it just absolutely blows my mind. One of my favorite things about it too, I should say is that while it’s, you know, you call it a Pavarini McGovern project, which it is, it’s actually a pretty awesome collaboration between Pavarini McGovern here in New York and Structure Tone New York. There are some specialty things in here, whether it be the hotel interiors and the eventual restoration of the palace theater where PMG as a business unit really leaned on our sister company Structure Tone.
So, the project itself has a lot of moving parts and I mean that literally and figuratively. Um, so it’s really kind of the mother of all repositioning projects as far as examples go. So it’s in the middle of Time Square. And what’s really interesting about the entire facility is that there’s no retail. There’s a subway entrance at the podium and there’s a branch bank and that’s it. And you know, as New Yorkers, we tend to avoid Times Square at all costs. But, um, most people that are visiting New York…
Rob Leon: Well, now we do. I mean we used to go as kids, right? We would want to go to Times Square.
Jason Vesuvio: My parents never let us go. Yeah, we usually walked around Times Square.
Rob Leon: You used to be able to get anything there, now you can’t get anything there, except a stuffed, you know, minion doll.
Jason Vesuvio: Right, exactly. And Bubba Gump Shrimp or whatever. So all of that stuff, whether it be the, you know, the restaurants, the retail and then the experience of the LED signage and all that advertising, which has a history that goes back decades. I mean, you can look back at photos from the 1930s and 40s and you see, you still see those billboards, you know. So, that isn’t necessarily new. But what Times Square is today is a total reimagination that began with the Giuliani administration. What this building doesn’t do is take advantage of that foot traffic. People are staying in the hotel and then they’re coming out and they’re leaving. Now the one beautiful thing, the crown jewel of the entire building is the Palace Theater. It’s a landmarked theater. SpongeBob was just there.
Rob Leon: Oh I missed it.
Jason Vesuvio: Missed opportunities.
Rob Leon: Funny enough, I heard good reviews.
Jason Vesuvio: I know everybody said it was fantastic. Um, so the palace theater is definitely a place where folks would go to see and will continue to go to see shows. But again, there’s no retail, there’s no reason for people to really stay. They’re coming and then going. So our client decided they need retail. So this, I’ll call it a $2 billion real estate program, is all being driven by approximately 50,000 square feet of new retail. So how are we doing that? Uh, we’re going to create retail at the ground-level and we’re going to excavate two levels down.
Rob Leon: So, where the existing palace theater is now.
Jason Vesuvio: Exactly and the big problem there is there’s a theater in our way—a landmark theater in our way. So, what we need to do is we need to lift that theater up, physically lift it up with hydraulic jacks, 31 feet in the air.
But before we do that, there’s a 47-story hotel above the podium. So we need to take that down. So we’re going to take that down, controlled demolition all the way down to the podium. And we’re going to create a cavity within the podium. By, and I’ll oversimplify this, flipping up some trusses, kind of removing structure that’s there and creating a space in order to check to see up.
Rob Leon: So, does that hotel, that existing hotel, that actually sits on the roof, technically the roof of the Palace Theater?
Jason Vesuvio: So to speak, I mean it has its own independent structure.
Rob Leon: Understood, but there is nothing between the palace theater in the hotel?
Jason Vesuvio: More or less. Yeah. More or less.
Rob Leon: That’s incredible.
Jason Vesuvio: And then we’ll rebuild that tower and then restore the theater. Now this is all happening because there are certain zoning laws in New York that allow an entity to remove 75% of their asset, if they keep 25%, they can build back as of right. No change of use, same height, uh, no FAR restrictions, same square footage. So what the client will get is a much more modern hotel with better layouts. Um, and they get to start from scratch when it comes to, you know, uh, rooms. Then we’ll, uh, we’ll white box the, the, the retail at and below grade. So it’s, it’s almost a four year program.
Rob Leon: That’s incredible. And so you think about like the creation of retail space when all we hear about is, you know, retail is dead, you know, the physical…
Jason Vesuvio: It’s really not, it’s crazy.
Rob Leon: Yeah. Right. So like you were saying, you know, Times Square is a destination for many different things. Shopping, physically shopping and being able to like walk out with something. So how you get delivery just kind of going to be a novelty. People want to go do that and there’s going to be specific destinations. So, I think it’s a gamble and I think it’s a good gamble on the developer’s part because they can change that to whatever they want. If retail goes towards a virtual experience that you go in, you know, you see a few products but everything’s going to be ordered and delivered to you, fine. That’s okay. That’ll still be there.
I think it’s really incredible. And I think it does add another dimension to the neighborhood and actually puts more visibility to the theater, which is interesting because all the theaters are just, you know, you walk by and you don’t even know you’re there except that you’re walking around the crowds or we’d go in there. But it puts more visibility to the theater. I think that’ll be interesting to see how that plays out.
So Jason, we started off the conversation really trying to say what or how do you define building repositioning. So, um, why don’t you tell us about some of the other projects that we’re doing and how that fits into that definition of repositioning and some of the challenges that you’re experiencing on those projects.
Jason Vesuvio: Sure, I mean, you know, my favorite projects are the ones that keep something existing and put something new on top or within.
One of the projects that we’re doing on the residential side of the business is 100 Vandam, which is on the west side, Greenwich kind of in the TriBeCa neighborhood. There was an existing six or seven-story brick building. It wasn’t landmarked, but I mean it was old. In fact, it had a timber structure on the inside and what our client wanted to do there was keep three of the four walls and bring something, a new structure out of it. So, it’s a little different than four 441 Ninth, which I’ll get into again, uh, in the sense that we put something on top of something new. This was, we put something new within something old.
And one of the things that we needed to do when we completely gutted that building to keep the brick façade basically, was we kind of built a mini Golden Gate Bridge around that. There’s a lot of steel holding that up and a lot of actually wood in the window openings themselves. So we put concrete footings in the sidewalk, I think maybe four to six of them around that building. And then there’s just a ton of steel holding it up while we excavated and then built the new superstructure until we could tie the brick together. So that’s an enormous challenge. You don’t get to start with a clean canvas. Sure. You still need to excavate. You still need to do a foundation, you still need to do superstructure, but you’ve got these three delicate walls and a lot of steel on the outside, you know, to contend with.
Rob Leon: Yeah, and obviously one the biggest challenges of working in New York City is the footprint. You’re not relegated to much further outside of the footprint of the actual space you’re building.
Jason Vesuvio: Yeah, we’ve been lucky recently because, uh, there’s a neighboring project happening. The address is Hudson, but we’ve got the back of their building, a budding, and luckily the CM there is very helpful, the CM doing the work. Uh, also Structure Tone New York.
Rob Leon: Great!
Jason Vesuvio: So, it’s a much easier coordination process. Um, and then for 441 Ninth, just to spend a little bit more time on that. I mean it’s a great client there, Cove Property Group. This is an amazing project that they’re really getting ahead of schedule in some regard as it relates to Hudson Yards.
They are really moving ahead. That’s, that’s part of what I think is attractive, probably to clients for building repositioning. It’s not just cost but speed. Those go hand-in-hand obviously. And that’s just a really cool one. Like I said, uh, something new coming out of something old. And then the key really was the elevator core. Uh, we gutted the inside of the building. We used shotcrete to actually beef up the existing columns in the podium, maybe 120-130 of those. So you know, we wrap it in a cage of rebar and basically like you’re going to put in an in ground pool in your backyard, you know, we shot it with concrete, smoothed it out, made it look all nice and pretty. We did new pits for the elevator core. And that’s really what, what’s driving the whole project. And we use that. That core is really kind of the, uh, the major, the centerpiece of the construction schedule. And this is a new, Class A building.
Rob Leon: Is there an anchor tenant?
Jason Vesuvio: Yup. Yup. Peloton is there and this is public knowledge Peloton is going to be on there. In fact, Lyft, Lyft I believe is already started there. Early fit out work. So that’s happening while we’re finishing the building up. So there’s a lot of coordination that happens there, but it really is going to end up being a really beautiful building.
Rob Leon: It is a really nice looking building. You know, it’s interesting. So, so you know, when we talk about the workplace, the interior space, we’ve been talking about the workplace and the home, those lines kind of blurring. You know, they’re starting to look similar with the collaborative space, with cafeteria lounge-y space. Uh, you know, people like to work in different ways, rather than sit in an office all the time. What are some of the similarities between residential towers and commercial towers? What are some of the things you see, we talked about like that vertical campus of possibly fitness centers and possibly shared conference space. Are we seeing similarities between..
Jason Vesuvio: Totally. I mean the common areas are, you know, that’s what they have in common pardon the expression. Um, it’s the, the space to interact with one another. I don’t know really where that comes from. I mean, I get it from a basic human need because we all do that. But I also wonder sometimes if it’s a reaction to how insular we’ve all become with our handheld devices or maybe it’s just a coincidence. I have no idea. But um, you know, gathering spaces, common areas, even beyond, uh, fitness areas. Cause sometimes you can just kind of plug in your and in your, in your own zone. I know when I work out I just want to be in my own zone. Um, that’s something that’s shared.
And I think technology, you know, the experience that you have in your building, whether it’s work or home, um, is something that—the functionality is definitely different. Um, you know, I don’t know that we’re getting down to where you can change the temperature in your own office necessarily, but I think what’s common is better, more intuitive, more interactive technology. And sometimes that can be touch screens in each room, in each office, whether you’re at home or at work, or through software applications that are out either purchased by the developer, um, or, or developed by them as a proprietary thing.
Rob Leon: I think, I think you’re right. I think the way the younger generation is looking to work, uh, the way it’s challenged us to rethink how we build things, both from the new construction side to the interior space. It’s been very interesting and it does revolve a lot around technology, the mobility of technology, the portability of being able to not have to work always in your office. And the fact that with the technology and all the different apps that you’re never just at the office. We’re just at home. You’re always in both places, at least virtually in both places. Whether you’re taking care of your, your bills through your handheld app. It used to be that you’d have to go to the bank and you’d have a passbook, people would actually type the numbers in it. And now it’s like,
Jason Vesuvio: It’s like your fingerprint.
Rob Leon: I don’t remember the last time I saw a teller, you know, but I think it all ties in together. Uh, it’s really interesting and I look forward to seeing where it goes. I’m the type person who actually enjoys the change even though I may not be as, uh, apt, at technology as my kids, but, um, but I’m learning, I’m trying to learn and it’s just making the experience—actually it’s making the work experience more interesting actually to stay in it for a longer time. So, it’s really great.
So, this was a, I think it was a great conversation. We covered a lot of ground and I’m really excited to see if some of the things we talked about, some of which were predictions and some which were, which were, you know, what we think could happen, uh, and seeing how that evolves over the, the next, you know, few years to decades and see how the city evolves. So, thank you for being here.
Jason Vesuvio: Thank you for having me.
Rob Leon: And I’m looking forward to putting this together with the other experts that we have in the field as well. So that’s it. Thanks.
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