Manhattan’s 10 most valuable office leases of Q1

By Hiten Samtani

The priciest office lease deal signed in the first quarter of 2013 was Macy’s $620-plus million renewal at 11 Penn Plaza, according to The Real Deal’s first-ever quarterly ranking of Manhattan’s most valuable leases. The ranking covers office leases signed in Manhattan in the first three months of 2013, ordered by dollar value over the lease term. The Real Deal used data from commercial real estate information company CompStak, cross referenced with data from CoStar, news reports and interviews with commercial brokers. Overall, office tenants gave Downtown a resounding vote of confidence in the first quarter, with five of the most expensive leases occurring in the area, the data show. “After eight consecutive quarter-over-quarter increases in rent in Midtown South, we have now seen the area plateau,” said CompStak’s CEO Michael Mandel. “Creative firms like WeWork and HarperCollins are choosing more affordable space Downtown.” Indeed, though Downtown had lower rents in comparison to other markets, tenants opted to take relatively large spaces and sign longer-term deals. Other than the Macy’s deal and the Jefferies Group renewal and expansion at 520 Madison Avenue — the second biggest deal of the quarter — none of the leases would have measured up to the first quarter of 2012’s most valuable deals, said CompStak’s research director Noam Shahar. See below for the top 10 leases. Manhattan’s most valuable lease deals of Q1 (Click on image to expand) Address: 11 Penn Plaza Estimated Value: $620 million to $633 million Market: Midtown Tenant: Macy’s Landlord: Vornado Realty Trust Square Footage: 646,000 Effective Rent: High $40s Lease Term: 20 years The retailer — which is the 1.1 million-square-foot Vornado-owned building’s anchor tenant — signed a deal that will keep it there through 2035. “Both we and this very important tenant decided that it was a good time to renegotiate that lease and extend it,” Steven Roth, Vornado’s CEO and chairman, said during the company’s first-quarter earnings call, although the lease wasn’t yet due. “And we did it very aggressively and we’re very happy that we did.” CBRE’s Scott Gottlieb, Michael Laginestra, Michael Wellen, Ken Meyerson and Patrick Nelson represented Macy’s on the deal, while Vornado was represented in-house by a team led by Craig Panzirer. Earlier this year, Vornado completed a $330 million refinancing of the building — located at 150 West 32nd Street across from Madison Square Garden — with HSBC. The real estate investment trust owns about 9 million square feet of commercial space in the Penn Plaza District. Address: 520 Madison Avenue Estimated value: $586.4 million Market: Midtown Tenant: Jefferies Group Landlord: Tishman Speyer Square feet: 457,797 Effective rent: Mid-$80s Lease term: 15 years The quarter’s second most valuable lease deal was pure old guard — a financial services company making a deal in a prime Midtown building. There was much speculation that Jefferies, an investment bank that is the country’s largest independent bank, would make a move to the West Side or to the World Trade Center, but it opted to stay put at 520 Madison, and even took additional space at the 43-story, 1 million-square foot tower. Jefferies took two spaces in the tower: a large block on the second and thirteenth floors and a smaller, higher-priced space on floors 16 to 20. The bank was represented by Dale Schlather, an executive vice president at Cushman & Wakefield along with Jefferies’ Barry Alton. Tishman Speyer was represented in-house by Megan Sheehan and Calvin Farley. Address: 40 Wall Street Estimated value: $ 115.8 million Market: Downtown Tenant: Green Ivy Schools Landlord: Trump Organization Square feet: 75,675 Effective rent: High $30s Lease term: 40 years The elite prep school will open a branch for pre-schoolers through eighth-graders with a separate entrance on Pine Street at the 63-story, roughly 1 million-square-foot building. Cushman & Wakefield’s Jeffrey Lichtenberg and Jared Horowitz represented the Trump Organization on the deal, while Green Ivy was represented by their colleagues Glenn Markman and Joseph Cirone. “We discerned that there was a big need for a special space for schools,” Lichtenberg told The Real Deal. “We discussed this with the Trump Organization, who were very supportive, and created a separate entrance.” Indeed, the education sector’s Manhattan footprint increased 47 percent between 2005 and 2012, with leasing activity concentrated in Midtown South and Downtown, according to a January report from CBRE. Address: 2 Washington Street Estimated value: $107 million Market: Downtown Tenant: Nyack College Landlord: The Moinian Group/Newmark Holdings Square feet: 166,385 Effective rent: Low $30s Lease term: 20 years After a six-year search, the Rockland County, N.Y.-based Christian liberal arts college found a site for its New York City campus. The deal at the 1.25 million-square-foot building near Battery Park will see Nyack officially move in this May, at which time it will leave its current Manhattan spaces at 361 Broadway and a single floor at 93 Worth Street. Rents will rise in five-year increments, and the college will also have the option to purchase the space. CBRE’s Gerry Miovski and Christopher Mansfield represented Nyack, while Newmark Grubb Knight Frank’s Jeffrey Gural and Adam Leshowitz represented the landlord, a partnership between the Moinian Group and Gural’s company Newmark Holdings. Address: 195 Broadway Estimated value: $105.4 million Market: Downtown Tenant: HarperCollins Publishing Landlord: L&L Holding and Beacon Capital Partners Square feet: 180,748 Effective rent: High $30s Lease term: 15 years The publishing giant’s decision to leave SL Green Realty’s 10 East 53rd Street and take Downtown digs at L&L’s 195 Broadway was heralded as a show of confidence in the Sandy-ravaged area — and was one of the most high-profile new leases of the quarter. Due to the building’s almost 40,000-square-foot floor plates, HarperCollins was able to go from 20 floors to just 4.5. CBRE’s Mary Ann Tighe, Ken Rapp, Christopher Mansfield and Lauren Crowley Corrinet represented HarperCollins, while L&L’s David Berkey represented the landlord. Built in 1916 and located between Dey and Fulton streets, 195 Broadway is the erstwhile headquarters of AT&T and Western Union. L&L paid Peter Kalikow just shy of $270 million for the 29-story, almost 1.5 million-square-foot landmarked building in 2005, and invested in major capital improvements and 30,000 square feet of retail space. “We are excited to return to the neighborhood where Harper Brothers founded what is now HarperCollins in 1817 and begin our third century of publishing where it began so many years ago,” Brian Murray HarperCollins’ CEO said in a press release when the deal was signed. HarperCollins’ 240,000-square-foot lease at 10 East 53rd in Midtown expires in July 2014, as TRD reported. “We bought the buildings with full knowledge that they would not to be staying in the property,” SL Green’s leasing director Steven Durels said during the company’s first-quarter earnings call, referring to the REIT’s $253 million acquisition of the building. Address: 200 Park Avenue Estimated value: $84.9 million Market: Midtown Tenant: Gibson Dunn & Crutcher Landlord: Tishman Speyer Square feet: 48,919 Effective rent: Mid $90s Lease term: 18 years The law firm opted to add another floor to its space at Tishman Speyer’s trophy MetLife Building, three years after inking a 20-year renewal and expansion lease at the property. Though the deal in 2010 came at an effective rent in the low $70s, the new deal will see Gibson Dunn pay in the mid $90s range, with an escalation throughout the lease term, according to CompStak. In the 2010 deal, CBRE’s Lewis Miller and Andrew Sussman represented Gibson Dunn, and Tishman Speyer was represented in-house by Megan Sheehan, Steven Wechsler and Calvin Farley. It was unclear which brokers were involved in the most recent deal. Address: 222 Broadway Estimated value: $75.7 million Market: Downtown Tenant: WeWork Landlord: L&L Holding Company Square feet: 120,260 Effective rent: Low $40s Lease term: 15 years The rapidly-expanding collaborative workspace provider opted for Downtown digs, having previously taken space in trendy neighborhoods such as Tribeca and Soho. “We are changing the way people work,” WeWork’s founder Adam Neumann told TRD earlier this year. “It just happens to be that we need space to do it in.” The deal at the 32-story, 750,000-square-foot office building was brokered in-house by landlord L&L’s Berkey and Andrew Wiener, while Sean Black of Jones Lang LaSalle and Mark Lapidus of WeWork represented the tenant. Lower Manhattan is home to a number of new technology and media companies, typically the industries that WeWork attracts. Address: One Lincoln Plaza Estimated value: $50.5 million Market: Midtown Tenant: SAG-AFTRA (Screen Actors Guild) Landlord: 20 West 64th Street Associates (Ogden CAP Properties) Square feet: 54,988 Effective rent: High $40s Lease term: 20 years SAG-AFTRA, the performing artists’ union, signed a deal to move into the 42-story 968,442-square-foot mixed-use building at 1900 Broadway across from Lincoln Center, as The Real Deal reported. The recently merged union is currently operating out of two spaces: AFTRA leases 20,849 square feet for its 75 employees at 260 Madison Avenue in the Grand Central submarket, while the Screen Actors Guild leases 41,870 square feet on two floors at 360 Madison Avenue in the same submarket. CBRE’s Brian Gell and Laurence Briody represented the landlord, while Cushman & Wakefield’s Barry Zeller, Mark Robinson and Arlene Sommer represented SAG-AFTRA. Address: 75 Ninth Avenue Estimated value: $46.4 million Market: Midtown South Tenant: Google Landlord: Jamestown Properties Square feet: 84,643 Effective rent: High $60s Lease term: 8 years The search czar continued to expand its Midtown footprint, with afurther expansion in Jamestown’s Chelsea Market bringing its presence there to about 250,000 square feet. Google was represented by CBRE’s Kenneth Rapp and David Hollander, while David Falk of Newmark represented Jamestown. Google also, of course, has 775,000 square feet at 111 Eighth Avenue, which it acquired in 2010 for $1.8 billion, but it has been squeezed for space as the building has a number of ongoing leases. Address: 1 World Financial Center Estimated Value: $44.9 million Market: Downtown Tenant: GfK Landlord: Brookfield Office Properties Square feet: 75,020 Effective rent: Low $40s Lease term: 15 years In June, the market research firm will take the entire fourth floor at the 1,655,000-square-foot building, located in the Brookfield Place complex at 200 Liberty Street. GfK will leave its previous Chelsea Market location at 75 Ninth Avenue. Jones Lang LaSalle’s John Wheeler, Paul Glickman, and Clayton Kline partnered with Brookfield Office Properties’ vice president of leasing, David Cheiken, to represent the landlord, according to CoStar. GfK was represented by Cresa’s Mark Jaccom and Colliers International’s Richard Plehn. “The unique attributes of the building’s fourth floor and the Brookfield Place complex carried the day,” Wheeler told CoStar at the time. “The fourth floor allowed for a highly efficient occupancy, giving the global research firm the ability to house its operations on a single floor.”

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