SL Green Touts ‘Historic Opening’ of Summit One Vanderbilt During Earnings Call
On the heels of SL Green Realty Corp.’s signing Chelsea Piers Fitness as its first tenant for its 1.4 million-square-foot One Madison Avenue development, the company talked about some of its other recent leases signed during its third-quarter earnings call on Thursday afternoon.
“We’re tracking well ahead of our leasing goals for the year,” Marc Holliday, SL Green’s CEO, said on the call. “And we’re doing that at rental levels that are ahead of expectations and almost flat with expiring escalated rents.”
For the third quarter, SL Green inked 44 office leases, totaling 445,453 square feet, with an average lease term of 10.7 years. Of these, lease concessions saw an average of 8.8 months of free rent with a tenant improvement allowance of $77.63 per square foot, not counting leases signed at One Vanderbilt.
Overall for 2021, through September, the company has signed 107 office leases in Manhattan totaling 1.4 million square feet.
“Our pipeline has grown to over 856,000 square feet, the largest that it’s been at any point during 2021,” Holliday said. “A lot of the leasing is being driven by either financial service businesses in particular, who leased 40 percent of our current pipeline, in TAMI, which is about 28 percent of our current pipeline.”
He added that a lot of the activity is focused on the “better quality” buildings of the portfolio, noting the majority of SL Green’s holdings have enjoyed significant capital investment over the years.
“We continue to develop them as healthy workplace environments, and that’s paying off for us and helping us increase our leasing velocity,” Holliday said.
On the call, SL Green, noted there was robust interest on the office side, especially at the One Madison development, revealing the level of large-scale tenant interest in the property is much “earlier to the game” than it was for One Vanderbilt.
“I think that speaks a lot about what we’re building, the quality, the location, and the desire of these large tenants to want to be in an interesting healthy amenitized work environment that is hard to find on the East Side of Manhattan,” he said.
Holliday also announced the “historic opening” of what he considers New York’s most thrilling and unique destination, Summit One Vanderbilt, which opened to the public earlier on Thursday.
The four-level, 65,000 square-foot entertainment space on the top floors of the 67-floor One Vanderbilt, offers an immersive experience and observation deck named featuring mirrored walls and floors, an outdoor terrace, a glass elevator on the exterior of the building, plus glass-floored booths overlooking Madison Avenue. It also has collaborated with AIR, a multi-sensory art installation.
“This time we’ve done more than push the boundary, we’ve completely shattered it,” Holliday said. “We spent years in design, taking the best elements of observation decks, cultural institutions, experiential art and immersive technology, and combined it all into Summit. The result is an experience that has the potential to not only become one of the most sought after destinations in New York City, but a true global phenomenon. It’s fun, it’s exhilarating, it’s thrilling, and it’s everything we set out for it to be.”
Other topics discussed include workers coming back to the office, flexible office space and the company’s taking back of eight garage lots during the past year.
“As we sit here at the end of October, with a rigorous, two-month sprint to the finish line to get done all we need to do to close out this year, and then embark on what we feel is going to be a solid 2022 for this company and this city, we’re excited,” Holliday said.
In its pre-call report, the company also pointed to its notable transactions during the quarter, which included the $121 million purchase of the fee interest in 1591-1597 Broadway, a 7684-square-foot parcel that sits beneath a portion of the Crowne Plaza Hotel on the corner of 48th Street and Broadway; plus the $790.1 million sale of 49 percent interest at 220 East 42nd Street, and the $133.5 million sale of its interests in 400 East 57th Street.
Keith Loria can be reached at Kloria@commercialobserver.com.