Liberty for One: Investment Technology Group Signs Biggest Lease of the Year

ITG’s current offices are at 380 Madison Avenue, a building involved in a fairly tricky ownership scenario. TAG 380, a subsidiary of the management firm run by Sheldon Solow, the legendary (and litigious) building owner, had paid $65 million for the 13-year leasehold for the property in 2001. That leasehold is set to expire in January 2014, and once that date strikes, the entire asset reverts back to an investment fund controlled by RREEF, a real estate investment fund and subsidiary of Deutsche Asset Management.

And when it regains the control of the leasehold, RREEF and its co-owners intend to either redevelop the building or raze it and rebuild from scratch. “It could even be torn down and a new building put up,” said a person familiar with the situation.
What that means for ITG and fellow tenants like the United Nations, which signed a six-year lease for 460,000 square feet, is a need for new homes by the end of 2013 at the latest.

Enter Newmark (NMRK) Knight Frank. John Hennessey, a managing principal in NKF’s Boston office, had worked with ITG for an office deal in the Boston market. Now faced with a pressing need for a new office, the firm reached out to NKF again to aid it in its search.

But if ITG was feeling the pressure, it wasn’t showing it.

“They were very focused, they were ahead of schedule, they were smart and had thought through everything,” said Neil Goldmacher, an executive vice president and principal at NKF. “They did not want to rush such an important decision, that’s for sure,” he added.

ITG was also very investigative, which is to be expected from the independent research brokerage firm. The firm looked at Mr. Goldmacher and his NKF team, along with their previous dealings with other financial services firms, especially those that, like ITG, have a “large component of mission-critical infrastructure” in their office space.

They were put at ease by Mr. Goldmacher, who previously worked with firms like JP Morgan, Knight Capital Group and Citibank, among others.

With its research and due-diligence complete, ITG signed NKF as its tenant representative in October 2010.

It enlisted the help of Mr. Goldmacher, Brian Goldman, Josh Friedman, Mr. Hennessey and Merrill Roth for a deal that would require “a lot of brain cells,” said one of the brokers.

Almost instantly, NKF took the team on a tour of a slew of high-quality, low-cost options, from everything in Midtown to lower Manhattan.

“What they really wanted was something that really gave a strong impression, you know, a very high-quality, trophy-type asset,” said Mr. Goldmacher.