Port Authority Eyes Brokerages as 4 Times Square Vacancy Looms
Al Barbarino July 17, 2013, 7:30 a.m.
When the Port Authority of New York & New Jersey landed Condé Naste as 1 World Trade Center’s anchor tenant three years ago, the agency agreed to buy out the media giant’s remaining lease at 4 Times Square.
Now, as the role of a consulting firm hired by the PA to evaluate options for the space nears its end, it sets up an opportunity for the PA to tap the Durst Organization – which owns 4 Times Square and is the PA’s partner at 1 World Trade – or another major real estate firm to take the lead in filling the space.
“They can engage with Durst, they can engage with another brokerage, they can do a lot of things,” a source close to the negotiations who requested anonymity told The Commercial Observer.
In the grand scheme of things, the estimated $200 million price tag the PA paid for the space is minute next to the billions the PA is spending at the World Trade Center, and sources suggested that the scenario is business as usual — and that several options for a new leasing broker are now on the table.
“This is not uncommon that when a tenant moves over that a [new landlord] picks up that obligation,” the source close to the negotiations said. “It’s part of the business and it gets dealt with… the Port has to figure out how they want to deal with the space.”
Media reports speculated this week, however, that the PA will be left with a $200 million, 800,000-square-foot gaping hole if efforts to fill the space aren’t ramped up, especially as new development pops up across the city – most notably at Hudson Yards and the Trade Center site.
The New York Post also questioned the PA’s decision to hire the consulting firm Navigant (for $5 million) to oversee the space at 4 Times Square, calling the latter “clueless.” The Chicago-based firm was called in by the PA to evaluate alternatives for the Condé space.
The Post called it “odd” that the task be given to a company “no hands-on real estate expertise,” adding that the company is under fire from state officials for billing practices and being scrutinized by the PA’s own inspector general.
“The guys at Navigant are not idiots, but I think there were certainly legitimate questions about their efficacy… in what they were hired to do,” the source close to the deal told The Commercial Observer. But, he added, “I believe that Navigant has done their work and they are no longer involved. They did some type of financial analysis.”
Additional options for the space: 4 Times Square’s other major tenant, Skadden Arps may add some of Condé’s space to its own; and investment advisory firm Neuberger Berman also checked out a possible 300,000 square feet at the space, the Post reported, also noting that Durst can sign a new tenant starting in 2020 at a higher rate than the below-market rents Condé pays.
Navigant, the Port Authority and Durst Organization did not return calls seeking comment in time for publication.