Thanks to JPMorgan, Milos Is in New York for an Additional 20 Years
In a story about restaurants and landlords, the landlords are invariably the bad guys.
This instance is that exception. Thanks to a sweetheart deal from building owners JPMorgan Asset Management, the midtown seafood mecca Estiatorio Milos signed a 20-year lease to stay in the same place it’s been in for two decades.
JPMorgan acquired the building at 125 West 55th St. from Boston Properties LP for $470 million in 2013.
Tod Waterman, of Waterman Interests LLC, a privately held real estate investment company, worked in partnership with JPMorgan to cement the deal with Milos back in 2015. “It’s a big part of our strategy to amenitize these office buildings,” he says of the 23-story property, which has Macquarie Group Ltd. and IHeart Media Inc. as its principal tenants. “When you have great global businesses that offer retail and other non-office opportunities that are good for the life of your tenants, you hold on to them.” Keeping the restaurant where it was allowed the tenants—and nearby JPMorgan executives—to maintain an easy commute to the dining room.
If there was a challenge, says Waterman, it was how to do more with the restaurant. So JPMorgan offered Milos the 10,000 square foot basement, formerly unused, as an opportunity to expand its private dining options. “Both our tenants and Costas [Spiliadis, Milos’s chef/owner] talked about the need for event space and private dining,” says Waterman.
Neither Waterman nor Milos would disclose the value of the lease that was signed in 2015, two years ahead of its maturity date. But Marc Healy, chief financial officer of Milos, says that it is only 20 percent above the amount the restaurant was paying. (The original 1997 lease, which Healy says was close to market value, included a 2 percent annual increase.) According to Benjamin Kahr, of LB Realty Services LLC, the annual asking rent for the nearby, bi-level Bar Americain space is $1.1 million, specifically $150 per square foot on the ground floor. He expects the rent for the recently on-the-market Osteria del Circo, across the street from Milos, to be in line with Bar Americain.
“We expected it to be 100 to 200 percent increase,” says Healy of the Milos rent increase. “When we saw that it was only a 20 percent increase, we didn’t even feel the need to negotiate, we grabbed it.” In comparison, Healy says the four additional Milos leases he’s overseen over the last six years (in London, Miami, Las Vegas, and Manhattan’s Hudson Yards) all required months of negotiation. “This was a ‘yes’ and a handshake,” says Healy. “That’s unheard of in New York.”
Milos future on 55th Street was worrisome before JPMorgan reached out. “The worry started years before the expiration of the contract,” says Healy. “By 2014, Costas was actively discussing what we would do if the rent doubled, or worse.”
Healy describes JPMorgan as “very good customers. And they’re already very good customers of our private dining, too. They were among the first to book our new private dining room.”
To commemorate the new era, Milos unveiled a multimillion-dollar renovation in October. The restaurant now has a striking, spiral, marble staircase that winds down to the new private dining room downstairs, which seats 200 people in four separate rooms. The space has its own kitchen and bar. “We’ve always had extremely high demand for private dining, but we often couldn’t fulfill it,” relates Healy. “And we could never accommodate buyouts. Now we can.” The demand has already been so high that the restaurant has installed a team to handle private dining.
Milos has consistently served some of the city’s best and priciest seafood for two decades. When it opened, the restaurant was innovative for the array of glistening snapper and barbouni and scampi arrayed across the ice, which customers could choose among—new to New Yorkers—and for the price they’d pay for the privilege, which has always been eye-opening. (Spiliadis has noted that the market price on his menu fluctuates not just with that of the seafood, but also with the cost of the sea salt.) And even for olive oil: In 1997, Milos was called a pioneer when it offered bread with oil, instead of butter.
A New Product for New Properties
As part of the deal, Milos leased an area adjoining the restaurant, a former flower shop. The 850-square-foot space will open in mid-December as Markato, a Mediterranean marketplace that will sell the restaurant’s core Greek products such as olive oil, sea salt, and honey, as well as prepared foods. Plenty of non-Greek products will populate the shelves, including caviar, olives, cheeses, and cured meats. Among the prepared foods will be sandwiches, soup, yogurt, and roasted meats.
The market is the prototype for an expanded Markato at Milos at Hudson Yards, slated to open in March 2019. The two-story restaurant will have elements people will recognize, namely plenty of marble and wood surfaces and the monumental seafood display, along with features that take advantage of its waterside location on the West Side, designed by Alain Carle Architecte (which oversaw the renovation of Milos on 55th Street). The 2,500-square-foot entrance of Milos at Hudson Yards, on the building’s 5th floor, will house a Markato and a mezze bar with tables and seats; a staircase and elevator will connect to the main dining room on the 6th floor.
Healy sees potential in a specific Markato product to be introduced: Greek-style gyros, made from spit-roasted meats such as Berkshire pork belly, sliced and stuffed into pitas with tzatiki, as well as organic chicken souvlaki. The roasted meats are a dramatic departure from the fish for which Milos is famed. “It’s the prototype for something we hope will be successful,” he says. “If customers appreciate it, we intend to roll it out everywhere there is already a Milos. And beyond that, too.”