It was April 23, two days before SL Green’s first-quarter 2012 earnings were announced, and chatter was reaching a fever pitch: Would Viacom, which occupies about 1.3 million square feet at SL Green’s 1515 Broadway, choose to renew its lease or opt to follow its Times Square cousin Condé Nast in taking space in Downtown Manhattan?
At the same time, the real estate investment trust was looking for a loan to place on 100 Church Street, negotiating what would be the largest mortgage in recent history for 1515 Broadway, and wrapping up a 361,044-square-foot lease for Random House at 1745 Broadway. In short, last month was a busy one.
Add it all up—owned interest in 38.7 million square feet in Manhattan, a nascent focus on residential, the retail footprint—and the REIT can take on a weight and life of its own. To the uninitiated, running a company as massive as SL Green might appear as untenable as safely launching a torpedo.
Instead, in the hands of chief executive Marc Holliday and president Andrew Mathias, it’s more like watching a thoroughbred on the final stretch.
At the moment, however, Messrs. Holliday and Mathias were in a conference room on the 19th floor of the REIT’s headquarters at 420 Lexington Avenue. They looked a little distracted.
“I think it will come down to price at the end of the day,” Mr. Holliday said when asked about the Viacom lease. He went on to explain that, if SL Green were to get some part of the building back, it wouldn’t be a big deal. “We would be very successful in re-tenanting at pretty significant rents for that market right now, but our first effort is always on trying to retain the tenant on best terms.”
Days later, when those terms emerged, they turned out to be fairly unique—Viacom would not only stay, but it would be increasing its space in the building, eventually taking all of the 1.6 million square feet of office space. After 2015, when the current lease is up, Viacom will pay an increase of $5 per square foot.