POWER OF ONE

The tenants in a specialty building want to be there, Levy said,and thats why it does better in bad times. Theyre not going from building to building just to get the best deal. Horowitz said he looked at cheaper spaces within a four-block area of 10 West 33rd Street but decided it was worth it to pay the slightly higher rate of 35 a square foot. We feel we can afford the extrarent, he said,because were going to do that much more in traffic.

Horowitz said he worked for Kenneth Cole a decade ago when the company moved to a relatively remote building on 50th Street and 11th Avenue.

A lot of people would only come to the building early in the morning or late at night, he said,never during the day when theyd lose an hour of commuting time. We lost a lot of appointments that way.

In the commercial real estate world,a specialty building is one devoted to one industry,for example fashion,or a niche within an industry,like menswear. Manhattans first specialty buildings may have originated in midcentury in the garment industry under the landlord Harry B Helmsley,said Grant Greenspan,a principal of the commercial real estate firm Kaufman Organisation.

When I came into the business about 23 years ago, Greenspan said,there was a coat building,an outerwear building,a hat area 8211; you name it,they had different specialty buildings. Greenspan said the theory behind specialisation was that wholesale buyers in town on purchasing trips during market weeks could maximise shopping time by visiting many manufacturers in only one or two buildings.

That is still the case in buildings like 550 Seventh Avenue,an upscale fashion designer building,or 215 West 40th Street,the Denim

Building. In bad times,specialisation can insulate landlords from the tumult of the market 8211; as long as they are not in an industry that goes belly-up in a recession. Weve seen that a specialty building doesnt have the extreme highs and extreme lows that a normal officebuilding would have,fluctuating with the economy, Levy said. They have more of a steady income. In fact,brokers said,some specialty buildings were able to command up to 20 per cent more than comparable space in a general office building.

Even so,with little turnover in most specialty buildings,landlords will typically not realise the extreme highs in rents in boom times,Levy said. In a specialty building,you really cant gouge the tenants when the market is roaring because you want them to stay asmuch as they want to stay, he said. At least in the past,specialty buildings tended to be the older,smaller office buildings that did not typically attract the richest tenants. For instance,Steinway Hall at 111 West 57th Street was built by the Steinway amp; Sons piano company in 1925 as a showroom for its pianos.

Now the building,which is near Carnegie Hall,also provides offices for businesses in the arts,entertainment and education sectors,which often have limited budgets,said Mark F Lauzon,a senior director with the commercial brokerage Cushman amp; Wakefield. The main benefit of specialization is it keeps the building full, Lauzon said. Youll get tenants who sign up because thats where they want to be,but youre not going to get top dollar from them.

One major problem for specialty buildings is that an entire industry may collapse or move. For instance,1115 Broadway,a building near the former International Toy Center,was being positioned by Adams amp; Company as a toy specialty building earlier this decade,which was working out great for us until the whole toy industry basically moved out of New York, Levy said.An effort to replace lost toy tenants with companies involved inseasonal products like holiday displays was moderately successful,but that market is too limited,he said. Adams amp; Company is now considering repositioning 1115 Broadway as a generic office building or a hybrid of seasonal product businesses and offices,said JamesBuslik,a principal with the brokerage. What were trying to do is consolidate the Halloween and seasonal products into a portion of the space, Buslik said,and then well make the balance of the space multitenanted office space.

Hybrid buildings,which might have two industries in them,or one industry paired with generic office space,are becoming a trend in the New York real estate market,said Christel Engel,a senior managing director with the New York office of the commercial brokerage Colliers International.

Its not necessarily a pure specialty building any longer, Engel said. Its going to be a semi-specialty building with an additional component. Those types of hybrids are starting to appear all over the place.Hybridisation provides the boost to occupancy that specialization offers,but insulates the building from the collapse of an industry,Engel said. A good example is 57 West 57th Street,where part of the building is used by professional medical offices and another part by entertainment companies. Tenants from two different industries typically do not require separate entrances,lobbies or elevators but,Engel said,those in the same industry wanted to be together on a floor.

More frequently,brokers said they were seeing larger,newer buildings turn toward specialization,and some developers have even proposed constructing specialty buildings from the ground up. For instance,Gary Barnett,the president of the Extell Development Company,is building a 34-story skyscraper at 50 West 47th Street called the International Gem Tower for the diamond industry.