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TR U M P STR A TEGI ES FO R R E A L ESTA TE

were skeptical that efficient office space could be constructed in an
oval-shaped building. Since I represented potential tenants, I was
invited to a presentation by the owner to allay any concerns I might
have relating to that problem. I was escorted into a carpeted room
that was beautifully furnished with plush theater-style seating that
circled a raised platform in the center. After I was seated, the lights
dimmed except for a spotlight on the center platform. Background
music began building up to a crescendo simultaneously with the
opening of the center of the raised platform and the slow emergence
of a huge, elaborate scale model of the entire building. The model
was lit from the interior and was far superior to any detailed replica
I had ever seen. I am certain it must have cost more than $100,000
to produce. It was awe inspiring. From the time the lights dimmed
until the presentation was over, a narrator extolled the virtues of
the building giving a well-conceived and executed sales pitch to en-
tice tenants to lease space. To answer the unasked question about
creating efficient office layouts, part of the building opened up to
show detailed office layouts complete with fixtures, furniture, of-
fice equipment, and models of people working in an extremely pleas-
ant environment. Then the Hines narrator threw out what appeared
to be the clincher. He said, “And all this can be yours for a rent of
$12 a square foot.” Since at that time the rental rate for most of the
comparable buildings in the area was twice that amount, and based
on my knowledge of construction and land acquisition costs, I knew
that couldn’t be the whole story. Most office leases in New York
City contain a provision that the tenant will pay the landlord a pro-
portionate share of any increase in real estate taxes and operating ex-
penses over the amount paid by landlord for those items in the year
the term of the lease commenced. I found out later that the leases for
the Lipstick Building provided that tenants would pay their share of
taxes and operating expenses whatever those amounts were. This
created an additional cost to the tenant between $12 to $14 a square

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