S&P moved its employees into parent company McGraw-Hill’s headquarters at 1221 Avenue of the Americas on the Monday following the hurricane, after its 55 Water Street location sustained flooding and electrical damage, sources said. The company made sure every employee had access to a company laptop before squeezing them into the 43rd floor of the McGraw-Hill Building.
“We’re crammed into one floor, where normally we would be spread across four,” said an analyst with the company’s CMBS division who was not authorized to speak on the record. Rumors swirling around the office indicate that it could be up to three months before employees are allowed back into the Water Street location, the analyst said. “At least there are more food options in Midtown,” he quipped.
Financial giants like Goldman Sachs and JPMorgan also have access to alternative office spaces, some with large conference centers. Their employees also have the ability to access company systems and databases from virtually anywhere, and many law firms have donated conference space to major clients, Mr. Caltabiano said.
Smaller companies simply cannot afford to sublease extra space, he added.
Also, why pay to sublease when free space is being offered up across the city, as New Yorkers and the real estate industry come together in the wake of the storm: Muss Development, Forest City Ratner, Related Management, Brookfield Properties and The Lightstone Group are among those offering space through a program administered through the New York City Economic Development Corporation.
For their part, those with sublease space on the market are doing everything possible to accommodate displaced tenants and modify sublease terms if necessary, and many large companies without extra space or the resources to work remotely have no choice but to sign subleases.
“I think sublease space will be leased because there’s a lot of it around, and I do think that people are being very accommodating,” said Arthur Draznin, an executive managing director at Newmark Grubb Knight Frank.
Firms reportedly taking sublease space in the wake of the storm include insurance company Aon, which took 112,000 square feet at 299 Park Avenue; law firm Fried Frank, taking an additional 30,000 square feet at the Seagram’s Building; and Fragomen, a law firm that subleased 62,000 square feet at 1301 Sixth Avenue.
Others may be leaning in that direction. On Friday, after two weeks of make-do efforts on the 43rd floor at McGraw-Hill, S&P sent an email to employees stating that the company could be taking another floor at the building, said the analyst who spoke on the condition of anonymity (The Commercial Observer was unable to confirm whether the additional space would be subleased in time for publication).
David Berke, an associate director at Cushman & Wakefield, leased a 7,575-square-foot sublease to Avistar Communications Corporation at 708 Third Avenue in Midtown.
“We have subleases that will help tenants who are displaced to enter into three- or four-month deals,” Berke said. “These spaces have fully wired phones, meaning that someone can move in on a Tuesday and start making calls by Wednesday.”