The Howard Hughes Corporation’s recent purchase of a $55 million chunk of Jean-Georges Vongerichten’s global restaurant company made one thing clear: It’s getting harder to tell where the restaurant world ends and the real estate world begins.
Although simple-minded pundits blame the closing of every “iconic” bagel shop on greedy landlords, the fact is that New York City restaurateurs depend on developers to fund and support new eateries more than ever.
Hughes, which operates the South Street Seaport under a long-term lease with the city, already brought Vongerichten’s acclaimed seafood brasserie the Fulton to Pier 17 and opened Vongerichten’s colossal Tin Building food market and eatery complex at the pier.
Now, the relationship is going global with a 25% stake and an option for 20% more in Jean-Georges Restaurants, the superchef’s 40-location eatery empire. It’s likely the largest ownership stake ever taken by a publicly traded real estate company in a restaurant brand.
The Big Apple’s leading restaurateurs have always had close, mutually beneficial relationships with developers and landlords. Related Companies backed the Hudson Yards dining temples.
In the 1980s, Equitable designed its former headquarters at 787 Seventh Ave., home to Le Bernardin, to accommodate restaurants and subsidized their rents for many years. But the Hughes-Vongerichten partnership easily dwarfs them all.
“We’re always looking to make our tenants’ and communities’ lives better coming out of the pandemic and there’s no better person on this globe than Jean-George in delivering these experiences,” Howard Hughes’ CEO, David O’Reilly, enthused to The Post.
Asked whether the deal was intended to bring Vongerichten’s brand to Hughes’ seven planned communities in the US, or to promote the chef’s growth beyond the Hughes portfolio, O’Reilly chuckled, “Does that have to be an either-or question?”
“We’re always looking to make our tenants’ and communities’ lives better coming out of the pandemic and there’s no better person on this globe than Jean-George in delivering these experiences.”
Howard Hughes’ CEO, David O’Reilly
“It’s not like we’re going to replicate the Tin Building at six other locations,” he said. “But there are plenty of opportunities for us to leverage Jean-Georges’ other restaurants” into the Hughes communities at such locations as Summerlin in Las Vegas and in Phoenix’s West Valley, and, “We’re in discussions now.”
But, he added: “It’s not us driving his expansion. We’re a 25% passive partner. Our goal is to give him leverage to support his growth plans by supporting his back-office development.”
Hughes’ commitment to Vongerichten came last summer as it prepared to open the Tin Building, which Hughes spent $194.6 million to launch. It’s now open five days a week and on track to be open seven days by January.
Meanwhile, the landlord-restaurateur love fest continues apace at scores of major Manhattan office buildings, including at L&L Holding Company’s 425 Park Ave., where Vongerichten plans to open next year.
“You only get one chance to make a first impression at the base of a building,” SL Green’s EVP in charge of retail and “opportunism,” Brett Herschenfeld said.
At SL Green’s One Vanderbilt, Daniel Boulud’s thriving Le Pavillon quickly established a culinary identity for the tower that is fully leased, mostly to financial and law firms. This fall, the developer and the chef teamed up again to launch Joji, an omakase spot helmed by sushi masters George Ruan and Wayne Cheng and nestled in an underground corner of Grand Central Terminal.
Le Pavillon from Boulud’s Dinex company is not a traditional tenant of SL Green but a partner with the developer under a deal they made pre-pandemic.
“We knew the old landlord-tenant lease model wasn’t what would work going forward,” Herschenfeld said.
Such increasingly common partnerships may or may not include a base rent and a revenue- or profit-sharing formula.
At Rockefeller Group’s 1271 Sixth Ave., where Greek seafood brasserie Avra opened last spring, the model is “to let restaurateurs focus on what they do best without the stress of a fixed monthly rent,” Herschenfeld said.
Herschenfeld added SL Green’s next culinary news is at One Madison Ave., the office tower that the developer is spending $2.3 billion to expand. The project will boast a “lifestyle-type offering where people can easily interact” of between 10,000 and 15,000 square feet; a gourmet market of 8,000 square feet; and a smaller, full-service sit-down restaurant, he said.