Gathered in front of the outstanding Herald Square view in Li & Fung's new space are: (from left to right) Rick Darling of Li & Fung, Anthony E. Malkin of W&H, Mitchell Konsker and Alexander Chudnoff of Cushman & Wakefield, and Brian Waterman of Newmark. Along with incredible light and air, 1359 offers its tenants front row seats for Macy's Thanksgiving Day Parade.

When crafting a boutique building's tenant roster, landlords face a unique set of challenges with each deal. W&H Properties' recent lease agreement with global trading group Li & Fung is a case in point. Even though the tenant and W&H could have easily agreed on terms, there was a period of time when the deal seemed to be dead. But thanks to persistent efforts by W&H, Newmark (1359's agent), and tenant brokers Cushman & Wakefield, Li & Fung will be relocating into 1359 by the end of the year. Below is a brief history of what took place:

Initial Visit
Li & Fung first visited the building in November of 2004, and the company representatives liked what they saw.

"They wanted a building that was near mass transportation, with a distinguishing look and feel. Li & Fung was very conscious of the statement they would be making by where they located their business," says Brian Waterman of Newmark, the building's managing and leasing agent, who - along with James Kuhn, Michael Frantz and Jonathan Fanuzzi of Newmark - represented ownership in the transaction.

Negotiations Begin
The opening negotiations were challenging because Li & Fung is based in Hong Kong and its annual statement is written in Chinese. "The English translation was difficult for us to understand; our CFO spent hours in analysis and conversation with the tenant," explains Mr. Waterman. "These issues, combined with a huge investment required by ownership in commissions, tenant installation and the opportunity cost of taking this once-in-decades large block of space off the market, were obstacles to getting the landlord on board."

Mitchell Konsker (see interview), Alexander Chudnoff and Curtis Foster of Cushman & Wakefield, the brokers who represented Li & Fung, began showing company executives other options. "They looked at many other buildings, and they were in serious negotiations with two of them, but 1359 was still their top choice," recalls Mr. Waterman.

In March, when Li & Fung called for a lease at another property, Newmark resurfaced the deal with W&H. "We didn't want to lose such a promising prospect," says Mr. Waterman. "I discussed the situation with Anthony Malkin of W&H, and he agreed that a solution could and should be found." The two thought about ways to obtain an informed assessment of the tenant's credit, the only missing piece of what was otherwise a perfect tenant/landlord fit. Finally, a breakthrough occurred. Mr. Malkin reached out to friends in Hong Kong and, on one late New York night, spoke with a leading Hong Kong-based investor, who gave an in-depth explanation of Li & Fung. From their conversation, it was clear to Mr. Malkin that Li & Fung was a company with the sort of history, future, and ownership that was ideal for 1359 Broadway. But was there time to get the company back to the building? Clearly, a full court press was necessary to put 1359 front and center with Li & Fung.

Negotiations: Part II
The next morning, Mr. Malkin was taxiing down the runway for a cross-country flight when he called Mr. Konsker, who remembers, "Tony persuaded my assistant to get me out of a meeting, and pitched for another opportunity for 1359 with Li & Fung. He presented the reasons why 1359 would be a better fit than the location Li & Fung was preparing to lease."

By the time Mr. Malkin's plane landed, he had been on the phone with the decision-makers at Li & Fung. "We negotiated all weekend long, and concluded that the deal was worth saving," says Mr. Konsker. "After the weekend, we met and finalized all the open business points."

Happy Ending
The newly improved 1359 Broadway will welcome Li & Fung into the buildingin the fall.

"Li & Fung felt that Tony was a hands-on owner and that he had addressed all of the outstanding business and technical issues that concerned my client, and this made all the difference in consummating this transaction," says Mr. Konsker.

Mr. Waterman agrees. "Tony Malkin brought Li & Fung back to the building." he says. "Top executives realize that he is on their level and quick to understand the essential elements of a deal's potential for success. He maintained tenant contact and was able to give his personal assurance that W&H would deliver on its promises on the points that were key to the tenant. In the final analysis, that made the lease drafting easier and the deal doable in a short time frame."