Nielsen is looking to downsize and Vornado, the company’s landlord at 770 Broadway, stands to profit.
The media, marketing and advertising research company, according to a report yesterday in The Wall Street Journal, has hired a leasing team from the brokerage firm CBRE to sublease its space at the 1.1 million-square-foot building amid a boom in the Midtown South leasing market where the property is located.
But subleasing its space is hardly Nielsen’s true intention.
Experts familiar with the company’s occupancy at 770 Broadway say that its goal is really just to structure a termination of its current deal with Vornado so that it can move into smaller offices Downtown where rents are far cheaper.
Nielsen occupies about 240,000 square feet at 770 Broadway, all of floors 7, 8 and 15. The company now needs about half of that. Its lease at the property only stretches another two years however, a term that is hardly sufficient to be an attractive sublease offering.
Nielsen is moving ahead with efforts to find takers however because Vornado would agree to do direct deals with any tenants the firm secures because of the way rents have risen, allowing the landlord to capture current market value rents for the space two years earlier than Nielsen’s lease would otherwise allow. Even if Nielsen did find a tenant willing to take the space short term, it wouldn’t be able to profit on the space’s higher market value because Vornado holds recapture rights on the space, giving it the option to take control rather than let a tenant sublease it.
One source familiar with 770 Broadway said that Vornado is asking for $70 per-square-foot rents for space at the property, which is also home to J.Crew.
The building has been suggested as a possible location for several tenants in the market, including Facebook and Microsoft, prominent tech companies that have been searching for space.