Viacom Nearing 1.3 Million SF Renewal
Media conglomerate Viacom is in talks to renew its lease at its current headquarters, 1515 Broadway, where it has approximately 1.3 million square feet of space, sources revealed to The Commercial Observer.
Those familiar with the negotiations, however, gave conflicting accounts of how long the lease would stretch.
In 2008, Viacom signed an extension at the two-million-square-foot tower that stretched its lease through 2015. Meanwhile, the multinational company is said to have a five-year renewal option that would bring its occupancy to at least the year 2020 if it so chose to take advantage of the offer.
However, at least one source with knowledge of the conversation indicated that Viacom was considering a longer deal that would likely span more than a decade.
Sourced insisted to The Commercial Observer that the potential renewal comes as Viacom, whose media empire includes Paramount Pictures and MTV, called off its search for space in Lower Manhattan, a market that is a focal point for large tenants because of several big vacancies in the region.
With an expiration looming at 1515 Broadway, Viacom had previously been considering options such as the World Financial Center and the World Trade Center, where it could have anchored a skyscraper to be built by Silverstein Properties.
The deal would appear to be a victory for 1515 Broadway’s landlord, SL Green, the city’s largest commercial owner, whose fortunes at the skyscraper are tied to keeping Viacom in place, particularly in a market where activity in recent months has slowed down. In 2010, the company conducted a $60 million renovation of the property, which sits at the heart of Times Square. The terms of the possible renewal were unknown as of press time, but leasing executives with a feel for similarly large transactions said that SL Green would likely strike a deal favorable to Viacom in order to avoid being saddled with such a huge block of empty space.
Many real estate leasing executives interviewed by The Commercial Observer expected the renewal deal to happen. There are few buildings in Manhattan with enough room to cater to Viacom’s huge footprint. A person familiar with the company said 1515 Broadway also houses infrastructure such as television production facilities and studios that would be costly to replicate elsewhere.
One option that had been kicked around in real estate circles was a relocation to the Time Warner Center if Time Inc., that building’s largest tenant relocates from the property, a move it is rumored to be considering. But many brokerage executives dismissed that possibility because the building, which is owned by the Related Companies, would likely seek rents far in excess of what Viacom is said to be willing to pay.
Viacom is the second large tenant to turn away from downtown in as many months. The law firm Chadbourne & Parke recently reconsidered a potential deal at One World Trade Center in a bid to remain in Midtown. That firm, as The Commercial Observer previously reported, is looking at a roughly 250,000 square foot lease at 230 Park Avenue.
Uncertainties still loom for the company’s real estate decision making. If Viacom signed a short term renewal, sources said it might be a sign that the company could be looking to exit 1515 Broadway, using the extension only to delay its departure and give it time to arrange a longer term decision that could include relocating to a
different property or a new development in the city.