Let it never be said that connections don’t pay off. Marce Sanchez always wanted to get into the New York real estate market, and in 1985 he got his chance. He was working as a construction manager for the Edward J. DeBartolo Corporation, overseeing the building of a Miami mall that contained the first Macy’s store in Florida. Through this project, he met the vice president of Macy’s, who eventually went on to work at Paramount Group, Inc. and tapped Sanchez to become director of design and construction.
Sanchez now directly assists the New York real estate investment and management firm with its simple growth strategy: seek out central-business-district properties, buy them at competitive prices, upgrade them to a premium standard, and provide unparalleled tenant service afterward. “What’s great about working with Paramount Group is the clarity of vision,” says Jarrett Huddleston,
a principal at partnering firm CANY Architecture + Engineering DPC. “They know what they want and how to get there, which allows us to focus on what we do best: resolving the technical issues of the building enclosure.”
Paramount Group’s strategy is clearly working. The company has assembled a 14 million-square-foot, $10.5 billion portfolio of office buildings in New York City; Washington, DC; and San Francisco. It is also known as a market leader in sustainability, having reduced its portfolio’s energy usage by 15.1 percent since 2007. Additionally, 80 percent of its portfolio is LEED-certified (22 percent Gold and 20 percent Silver). “We emphasize the fact that we’re not only owners but managers as well,” says Sanchez, now the firm’s vice president of construction and development. “As such, we’re constantly upgrading our properties because we’re conscious of the cost savings that can be achieved for our tenants with energy efficiency.”
Sanchez, whose job is to analyze properties to determine the feasibility, scope, and cost of their potential improvements, describes some of Paramount Group’s more notable projects.
One Market Plaza
For a while now, Paramount Group has had a strong desire to dip into the San Francisco market. It’s finally doing so with an exciting property near the city’s famed Embarcadero, an important thoroughfare surrounded by numerous hotels, restaurants, and retail venues.
One Market Plaza is expansive, consisting of two office towers—the 42-story Spear Tower and the 27-story Steuart Tower—that together have more than 1.6 million square feet of office and retail space. But, the large retail spaces on the first floor do not meet the needs of modern tenants, and the architecture and design of the lobby and a connecting concourse are eclectic—“a hodgepodge of different kinds of marble and glass, with no continuity,” Sanchez says.
To ready the space for today’s vendors, Paramount Group is redesigning the existing retail footprint, adding exterior-facing retail space, and modernizing the décor. To that end, it is incorporating flamed absolute-black granite, office lobby walls of white glass, and LED lighting throughout the entire floor. Sanchez’s team is also installing 16-foot-high storefronts made of ultraclear low-iron glass, and it’s creating a large lobby restaurant and bar to enliven the atrium and make it a space for nightlife fun as well as daytime shopping.
The changes will help the building compete with newer office towers going up along the Mission Street corridor near the Embarcadero; they will fit the vision of the new San Francisco. “There’s a push to make it more of a 24-7 city, and what we’re doing to One Market Plaza is consistent with that vision,” Sanchez says.
In June 2011, Paramount Group purchased a property that’s well located on Pennsylvania Avenue and 7th Street. The 12-story glass and precast office tower had much to offer: it is fully integrated with the Fireman’s Fund Building, a Washington, DC, landmark. It has expansive views of the Washington Monument, the National Archives, and the National Mall from its windows and from a 6,000-square-foot landscaped roof terrace. It has a four-story parking garage with 153 stacked spaces that create an above-average parking ratio. And, it’s LEED-certified. But, because it was originally constructed in 1991, Liberty Place still needed some work.
“The architecture of the interior lobby was staid and old-fashioned,” Sanchez says. Today, as it re-leases the building’s 172,734 square feet of office space, Paramount Group is also renovating the 3,000-square-foot lobby and elevator cabs to bring the property up to a more modern standard. The old ornate lobby was broken into small areas and felt very closed in, Sanchez says, so his firm is opening it up. The company is also installing new finishes, including a majestic two-story entrance, granite floors, limestone walls, sophisticated lighting, exquisite paintings, and other features that will reinforce a high-end look. As of press time, the project was expected to wrap in June 2014.
32 Old Slip Street
New York City
“Our strategy has been to acquire existing buildings and improve [and] expand them as much as possible within zoning limits,” Sanchez says. “A good example of that is a building we purchased in Lower Manhattan at 32 Old Slip.” Zoning codes determine that structures have a certain floor-area ratio (FAR), but there are areas within any building, such as mechanical or storage rooms, that do not count against FAR. Paramount Group went through all of 32 Old Slip, an office building, calculating square footage as it related to FAR, and it determined that 23,000 square feet could be added.
This created an opportunity to construct an additional floor at the top of the building that added tremendous value. “It involved a lot of research into areas within the building that didn’t qualify as FAR square footage according to the zoning code, but when the property location is considered, you understand why we were so diligent about expanding it,” Sanchez says. “It’s in a great location along the waterfront, which was booming, and because we specialize in acquiring properties in prime locations and adding value to them, it was right up our alley.”
New York City
Sited near Times Square, with unencumbered 360-degree views from its center core floors, this 2.6 million-square-foot, 48-story office tower offers the prestigious address and elegant space that today’s large corporations so often look for. But, the building’s retail space, accessed from the exterior plaza, wasn’t working, and changing it proved challenging.
“The plaza is controlled by the city, and [its] aesthetics, seating, and open space cannot be changed without approval from the New York City Planning Commission,” Sanchez says. Paramount Group purchased the property in 1976, and it originally obtained permission to renovate the exterior plaza in 1989, which led to an eventual update to the finishes and the creation of a better pedestrian experience at the sidewalk level and in the two subterranean wells.
The subterranean retail space still wasn’t ideal on the north side of the plaza, though, so Paramount Group is now making another change. Namely, it’s raising the elevation of the north side of the plaza and creating a street-level glass box that will serve as an entrance to the retail space below. The plaza will be pedestrian-friendly, with both permanent and movable seating, and it will be a prime spot for a sophisticated retail tenant. “The property presents a great opportunity for a retail user to create indelible landmark signage, as it sits on the edge of Times Square,” Sanchez says.
75 Howard Street
Also near the Embarcadero in San Francisco will be a second property, a planned 26-story condominium tower at 75 Howard Street that will include 155 residential units and two restaurants on the first floor. An eight-level above-ground parking deck currently occupies the site, and Sanchez says it presented an opportunity. “San Francisco is crying for housing right now,” he says, “but it’s difficult to get projects approved, especially when they require a rezoning, and we have been working through the city approval process for 24 months on this rezoning.”
San Francisco-based architecture firm Skidmore Owings & Merrill is designing the building, and when it’s complete, nearly every unit will offer a view of the San Francisco Bay and the Bay Bridge. The design will be elegant but friendly.
“The first seven stories of the project, called the podium, will have ipe-wood verandas that give a neighborhood feel,” Sanchez says. “On top of the podium will rise the tower, a slender glass and granite posttensioned concrete structure befitting a modern skyline.”
Q&A with Marce Sanchez
How did you begin your career?
I am a civil/structural engineer with a degree from Youngstown State University in Ohio. My first opportunity was with the Edward J. DeBartolo Corporation, where I worked in the field as an engineer and then a project manager. After this field experience, I returned to the home office to work in the purchasing department. This enabled me to understand how a project is constructed “on paper” with an emphasis on cost containment and scheduling.
What advice would you give someone entering your field?
The best advice to anyone entering this field and being successful is to have well-rounded experience in all aspects of the design/construction and overall development process.
What is one significant lesson you’ve learned?
No matter what one’s position is in a development and real estate outfit, one must be focused and not afraid to ask questions. In addition, it is critical to take on more responsibilities when the opportunity arises, focusing on your area of responsibility but also understanding the entire development strategy and how its many complex pieces fit together to create a financially successful product.
What would you like to accomplish over the next 10 years?
Continue to improve Paramount Group’s existing portfolio of properties, taking advantage of the rapidly improving design and engineering techniques that are transforming the industry. Moreover, my division looks forward to adding new development properties and helping to advance our acquisition strategy to increase the size of our portfolio.
What is your favorite Paramount Group property (currently owned or since sold)?
There are actually two properties that are my favorites—and for different reasons: the condominium development at 75 Howard has an opportunity to create an architecturally significant statement on the San Francisco skyline, [one] which will be visible to anyone passing through the San Francisco Bay or traversing the Bay Bridge. And 1633 Broadway represents what Paramount Group does best: continually transform a property to meet the needs of present-day office tenants.