From the outside, 222 Broadway fits the stereotype of the Downtown financial office tower.
But when Bank of America downsized, leaving roughly 250,000 square feet of space vacant, a series of tours guided by its new owner, L&L Holdings, quickly blasted that stereotype away.
Condé Nast committed to 80,000 square feet at the tower in early March. WeWork, which provides collaborative workspace for tech and media companies, was next in line.
Robert Becker, senior leasing manager at The Durst Organization, joined the company eight months ago. Having previously worked closely with the firm as an executive with Bank of America’s global real estate transactions and leasing operations team, Mr. Becker jumped on board with inside knowledge of the firm’s pivotal role in shaping the landscape of Read More
Everybody Go Downtown
After the storm, things are looking brighter for the lower Manhattan real estate market.
Even with construction scaffolds clogging the district’s narrow streets in a reminder of Hurricane Sandy’s devastation, Downtown office leasing activity jumped 73 percent in the first two months of the year, according to Cushman & Wakefield.
The collaborative workspace provider WeWork signed a 16-year, 120,537-square-foot lease at 222 Broadway, The Commercial Observer has learned.
David Berkey and Andrew Wiener represented the building owner L&L Holding Company in-house. Mark Lapidus of WeWork and Sean Black of Jones Lang LaSalle represented the tenant. Asking rents at 222 Broadway are in the mid-$50 per square foot range.
WeWork typically provides communal office space to tech and new media companies, making the lease another sign of Lower Manhattan’s growing appeal to that type of firm. Mr. Berkey was quick to point out that tech and media tenants are “nothing new” in the neighborhood.
“I’ve been telling whoever will listen that for two years now we’ve seen nothing but this kind of tenant here and at [L&L's] 195 Broadway,” Mr. Berkey said. “We haven’t seen financial services or law firm tenants. It’s not a new phenomenon by any stretch.”
Like the westward expansion that gripped the nation during the early to mid-1800′s, the expansion of Midtown Manhattan offers the city’s commercial real estate pioneers a modern crack at manifest destiny.
The trajectory of Midtown’s new building stock over the last seven decades tells a story of westward expansion that most recently struck Midtown West with the Hudson Yards development project.
“Hudson Yards really is the last frontier,” said James Delmonte, principal and vice president of research at Avison Young. “Firms are looking for newer product and larger floor plates, largely because there really is no available land on the east side.”
TD Ameritrade has signed a 10-year, 9,509-square-foot lease for the ground floor and lower level at 100 Broadway, The Commercial Observer has learned.
The corner retail space in the 24-story office building features more than 170 feet of frontage along Broadway and Pine Streets.
“It’s a great corner space in the heart of the Financial District and steps from Wall Street, which lends itself well to a prominent financial institution like TD Ameritrade,” said Cushman & Wakefield’s Gene Spiegelman, who represented the landlord Madison Capital with Michael O’Neill.
Condé Nast and Interpublic Group were the gifts to New York that kept on giving, as the former added 138,773 square feet to the 1 million it inked last year at One World Trade Center and the latter blazed through a series of deals throughout the year, beginning with a whopping 220,359-square-foot transaction in October and ending with a smaller one last month.
In all, the city’s 10 biggest office leasing transaction were modest compared to 2011, when deals by Nomura Holding and Coach reached nearly 2 million square feet alone.
Still, a wave of transactions from a variety of business sectors—from government and education to legal, financial services and media—proved that, even during economic doldrums, bold can be beautiful.
After the jump, the 10 biggest office deals of 2012.
Editor’s Note: Renewals were not included in this list, nor were deals completed after Dec. 18, the date the final tally was published.
The Year in Review
The five-year saga involving the General Services Administration and 1 World Trade Center reflects both intractable Washington gridlock and the lurching progress at the building formerly known as the Freedom Tower.
When the GSA , an independent government agency in charge of supplying and managing federal offices, secured a 270,000-square-foot lease at 1 World Trade Center, it pushed the still-rising landmark above 50 percent occupancy.
But along the way there was a dramatic scaling back of lease terms, an angry congressman and a Las Vegas spending spree that nearly torpedoed the transaction.
After the jump, an illustrated guide to the biggest deal of the year.
Year in Real Estate
Just when New York’s traditional geographic dividing lines were beginning to seem quaint, Hurricane Sandy made landfall and brought them back to light.
Downtown, which over the years had become harder and harder to distinguish from uptown, was plunged into darkness, sending the relatively young and vaguely creative well above 14th Street nosebleed territory in search of power. Only the Brooklyn side of the Williamsburg Bridge stayed illuminated, a stark metaphor for the borough’s slow transformation into a contender.
But in commercial real estate, boundaries continued to disappear. In January, Condé Nast expanded its 1.05-million-square-foot lease at 1 World Trade Center by 138,773 square feet, helping lower Manhattan shed its stodgy finance-centric reputation and prompting slight panic among the owners of Midtown media canteens like Michael’s.
Condé Nast, the mega-publisher behind such magazines as Vogue, The New Yorker and Vanity Fair, holds several events per month at the Lambs Club on West 44th Street, two blocks from its 4 Times Square headquarters. It’s also been known to hold events at Michael’s on 55th Street, and a host of other venues.
Now, with the company having leased over 1.1 million square feet at 1 World Trade Center and saying goodbye to its old quarters, a new posh venue for its gatherings will have to be found, all of which has brokers asking the question: will high-end dining and retail come to Manhattan’s southern tip?
Retailers are hungry for Manhattan retail space at the moment, but lower Manhattan luxury stores may take time, said Steve Rappaport, senior managing director with SINVIN Realty. For that to change, a high-end retailer may need to stake a claim early on and wait for value to grow, Mr. Rappaport said.
The West Side of Midtown has increased its presence in the commercial real estate market within the past 20 years. The market now boasts a vacancy rate below 10 percent across all assets.
“To understand this market, it’s important to view it in the context of the history of the last 25 years,” explained Mitch Arkin, an executive director at Cushman & Wakefield. “In the ’80s, the market started pushing west with the development of Carnegie Hall Tower, the Equitable Building, 787 Seventh Avenue, followed by 1585 Broadway, 1540 Broadway, 750 Seventh Avenue, Worldwide Plaza, 1745 Broadway [and] Metropolitan Tower. Those buildings all brought Eighth Avenue and Broadway north of Times Square into Midtown.”
Silverstein Properties this month leased a 50,000-square-foot block of space at 120 Broadway to Beyer Blinder Belle Architects & Planners LLP, taking advantage of the incipient migration of a new breed of tenant into the Financial East area.
The prewar buildings that predominate in the submarket, which includes the financial landmarks along Broad and Wall Streets, have long since ceased attracting the biggest banks, law firms and insurers. Still, while vacancies in the submarket remain at almost 14 percent, local landlords and brokers say the flow of nontraditional tenants into the area is beginning to gain momentum.
2012 Owners Magazine
As a pair of 26-foot steel beams were hoisted high above Manhattan on April 30, the crowd below spoke of resilience, hope and remembrance.
One World Trade Center had just hit a height of 1,271 feet, making it the city’s tallest building. Port Authority Executive Director Pat Foye said in a press conference that the building will “anchor Lower Manhattan and its rebirth for many generations to come.”
But tourists and tristate residents aren’t the only ones noticing the change in the city skyline. A number of commercial property owners are looking to the tower and other developments as a hopeful bellwether for the future, despite what most analysts still describe as a stagnant market.
The numbers speak for themselves. Real estate brokers leased 12.9 million square feet through July 31, 2012, a 28 percent drop from the 17.9 million square feet inked during the same period in 2011, according to a CBRE report. Vacancy sat at 7.5 percent, no change from a year earlier.
The Silverstein Properties marketing center on the seventh floor of 7 World Trade Center has the air of a sacred vault. After entering past the sliding glass doors, visitors are greeted by a hallway lined with pictures documenting the World Trade Center’s sometimes contentious, sometimes momentous journey from somber graveyard to gleaming new development featuring state-of-the-art office space and retail.
Pictures depicting union construction workers at a 2010 protest and Larry Silverstein unveiling Jeff Koons’s balloon flower monument outside 7 World Trade Center compete for space with five LCD televisions broadcasting Silverstein promotional videos.
But the most effective marketing in the entire suite may be the building itself.
The Lawyers You Call
Jonathan Mechanic, a partner at Fried Frank and chairman of the firm’s real estate department, represents clients in every type of commercial real estate transaction. His deals have included Conde Nast’s 1-million-square-foot lease at One World Trade Center and, more recently, the 170,000-square-foot bite that the New York Genome Center took out of 101 Avenue of the Americas.