Ann Inc., the apparel company that owns and operates fashion retailers Ann Taylor and Loft, has renewed its office lease at 7 Times Square, landlord Boston Properties said on its third-quarter earnings call today.
While not providing specifics on the renewal, which Boston Properties President Doug Linde said was just signed “this week,” Ann Inc. currently occupies roughly 300,000 square feet across 12 floors at the 47-story, 1.3-million-square-foot office tower bound by Broadway, Seventh Avenue, West 41st and West 42nd Streets, according to CoStar Group data and previous reports.
The company agreed to a 15-year lease to anchor 7 Times Square, also known as Times Square Tower, in 2004 shortly after the building’s development and completion. Ann Inc.’s lease was due to expire in 2020, and Boston Properties executives said the landlord is providing the tenant with a “free rent” period in 2018 in exchange for its commitment to a “long-term renewal.” Boston Properties co-owns 7 Times Square with an affiliate of Norwegian sovereign wealth fund Norges Bank, which agreed to acquire a 45 percent stake in the property for $684 million in 2013.
The real estate investment trust, which is the largest office owner in the country with a portfolio of nearly 49 million square feet, did not provide the asking rent or the exact length of lease in the transaction. Broker representation in the deal was not immediately clear. A Boston Properties spokeswoman did not immediately return a request for comment.
Owen Thomas, Boston Properties’ chief executive officer, said the REIT had an overall successful quarter across its office portfolio, which is focused on the New York, Boston, Washington, D.C., San Francisco and Los Angeles markets. Thomas said the company leased 2.6 million square feet in total in the third quarter, which he described as “significantly above average” for the period.
The REIT is seeing the most strength in the “technology and life sciences” tenant segments, Thomas noted, adding that the San Francisco and Boston office markets are currently “outperforming” New York and Washington, D.C.
Thomas said Boston Properties continues to expect “tepid but steady economic growth” from a macroeconomic perspective moving forward, and said the company is “not making any investments or operating decisions” based on the projected impact of the Trump Administration’s current tax reform efforts. But he added that the REIT remains optimistic about job creation and a “relatively low interest rate environment” in the near future.
Providing an outlook on the investment sales market for commercial office properties, the CEO noted that transaction volume in the sector was down 27 percent nationally through the first nine months of this year. Thomas cited “fewer high-quality assets” on the market, with more “trophy assets” in core markets currently in the hands of “long-term holders” who are less willing to sell.