Bernie Madoff’s old office space is fast getting filled.
Goulston & Storrs, a law firm, just signed a deal for 19,270 square feet at 885 Third Avenue, taking the 34-story building’s entire 18th floor for rents in the $70s per square foot.
Scott Klau, who is part of an agency from the brokerage Newmark Grubb Knight Frank that handles deals at the tower, said the deal is part of a wave of activity at the 640,000-square-foot property, which is popularly known as the Lipstick Building for its distinct oval floorplate and reddish stone facade.
Mr. Klau said a deal is in the process of being negotiated for the property’s 17th floor and that a portion of the 19th floor had also been leased.
Mr. Madoff, who is serving the rest of his life in a North Carolina federal prison, used to occupy the three floors at the property where he used to conduct both his successful market-making business and also a multi-billion dollar ponzi scheme that was the largest in U.S. history.
When Mr. Madoff was arrest by FBI agents in 2008 and his offices were shuttered.
The building has gone through problems of its own since then that have stood in the way of filling lingering vacancies. In 2010, Metropolitan 885 Third Avenue LLC, went bankrupt after overpaying for the property. By 2011, the Argentinian investment company IRSA recapitalized the building and took control. Mr. Klau said the restructuring restored capital necessary to begin arranging leasing deals, including money to pay for incentives such as construction work.
“We created pre-built office units on the building’s 26th floor,” Mr. Klau said. “When Goulston saw the level of quality in that space I think it really helped sell them on the property and what we could do. We’re building out a similar installation for them on 18.”
There are several vacancies on Third Avenue, a market that typically lags the rest of Midtown in rental rates and occupancy. Mark Weiss, another NGKF executive who works on the agency team, said the Lipstick Building stands out as one of Third Avenue’s most iconic and prestigious locations and is considered by tenants not in relation to neighbors but other top buildings in Midtown.
“The tenants looking at Lipstick are also considering space on Park or Fifth Avenue, not Third Avenue,” Mr. Weiss said. “Compared to those buildings we usually are a discount.