You ended up leasing a lot of the space to Ecko, which nearly went bankrupt during the recession. Is the company still a tenant and what happened to its space?
We formerly leased about 250,000 square feet to Interpublic and they downsized around 2000, and then around 2004 we leased their space to Ecko. Ecko was like the Tommy Hilfiger of its day—this really popular label. And their business was strong and growing and they took 270,000 square feet. They were the largest tenant by far. The building has always attracted great tenants—we had Reader’s Digest, Forbes, Mattel. Nike has three floors. Ecko had floors two, three, four, five and six in the 40 building and floors two, three, four and six in the 28 building. We wound up taking floors back: three and four in both properties. We have worked out an arrangement to assist Ecko in subleasing its remaining space, and we have the option to terminate its lease if we find a tenant for its space where a direct arrangement is more suitable. Once we took the space back, we could see the activity brewing in Midtown South with high-tech and media companies.
And that’s who you wound up leasing to?
That’s right. We leased three to Estée Lauder and four to AppNexus and there’s a lot of activity on the remaining floors. We can wait to find a tenant for the sixth floor because Ecko is still on the lease for that floor and subleases the space, part of it to Usablenet. I remember the tech boom of the late 1990s and we’re very aware that not all these companies that you see in Midtown South are going to make it. At some point there will probably be a shakeout and so we have been selective. One of the motivations we’ve had working with AppNexus is we like their business model. The principals had sold their last business to Yahoo. This venture is backed by Microsoft. They’re well funded.
What’s going on with the fifth floor and the other space that is available?
Five was sublet by Ecko to a company called Big Fuel. They have a great name but I’d never heard of them. Then six months later they were purchased by Publicis. Ecko’s lease stretches to 2014. A lot of brand-name tenants have been through the building. We are close to leasing the second floor and we’re looking to create a jewel box on the fifth floor and the penthouse space of 40 West 23rd Street, by combining the two floors into a block and connecting it with the roof space that starts on seven. We’re also looking to help AppNexus expand, possibly on five. Right now we’re preparing to build the roof space, moving the cooling units that are there to the roof of 28 West 23rd Street, which, remember, is 12 stories. A lot of what we’re doing we were motivated and inspired by 111 Eighth Avenue and 200 Fifth Avenue, which are like the bookends of the neighborhood, Google to the south and Grey to the north.
What about the second floor?
We’re marketing the second floor right now. We have gotten in the mid $50s for the other spaces recently and so we’re asking in the $60s for the space.
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