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The Real Deal with CompStak Data: Manhattan’s 10 most valuable office leases of Q1



By Hiten Samtani 

(For the original article, click here)

The ranking covers office leases signed in Manhattan in the first three months of 2013, ordered by dollar value over the lease term. The Real Deal used data from commercial real estate information company CompStak, cross referenced with data from CoStar, news reports and interviews with commercial brokers.

Overall, office tenants gave Downtown a resounding vote of confidence in the first quarter, with five of the most expensive leases occurring in the area, the data show.

“After eight consecutive quarter-over-quarter increases in rent in Midtown South, we have now seen the area plateau,” said CompStak’s CEO Michael Mandel. “Creative firms like WeWork and HarperCollins are choosing more affordable space Downtown.”

Indeed, though Downtown had lower rents in comparison to other markets, tenants opted to take relatively large spaces and sign longer-term deals.

Other than the Macy’s deal and the Jefferies Group renewal and expansion at 520 Madison Avenue — the second biggest deal of the quarter — none of the leases would have measured up to the first quarter of 2012’s most valuable deals, said CompStak’s research director Noam Shahar.)

Address: 11 Penn Plaza
Estimated Value: $620 million to $633 million
Market: Midtown
Tenant: Macy’s
Landlord: Vornado Realty Trust
Square Footage: 646,000
Effective Rent: High $40s
Lease Term: 20 years

The retailer — which is the 1.1 million-square-foot Vornado-owned building’s anchor tenant — signed a deal that will keep it there through 2035.

“Both we and this very important tenant decided that it was a good time to renegotiate that lease and extend it,” Steven Roth, Vornado’s CEO and chairman, said during the company’s first-quarter earnings call, although the lease wasn’t yet due. “And we did it very aggressively and we’re very happy that we did.”

CBRE’s Scott Gottlieb, Michael Laginestra, Michael Wellen, Ken Meyerson and Patrick Nelson represented Macy’s on the deal, while Vornado was represented in-house by a team led by Craig Panzirer.

Earlier this year, Vornado completed a $330 million refinancing of the building — located at 150 West 32nd Street across from Madison Square Garden — with HSBC. The real estate investment trust owns about 9 million square feet of commercial space in the Penn Plaza District.

Address: 520 Madison Avenue
Estimated value: $586.4 million
Market: Midtown
Tenant: Jefferies Group
Landlord: Tishman Speyer
Square feet: 457,797
Effective rent: Mid-$80s
Lease term: 15 years

The quarter’s second most valuable lease deal was pure old guard — a financial services company making a deal in a prime Midtown building. There was much speculation that Jefferies, an investment bank that is the country’s largest independent bank, would make a move to the West Side or to the World Trade Center, but it opted to stay put at 520 Madison, and even took additional space at the 43-story, 1 million-square foot tower.

Jefferies took two spaces in the tower: a large block on the second and thirteenth floors and a smaller, higher-priced space on floors 16 to 20. The bank was represented by Dale Schlather, an executive vice president at Cushman & Wakefield along with Jefferies’ Barry Alton. Tishman Speyer was represented in-house by Megan Sheehan and Calvin Farley.

Address: 40 Wall Street
Estimated value: $ 115.8 million
Market: Downtown
Tenant: Green Ivy Schools
Landlord: Trump Organization
Square feet: 75,675
Effective rent: High $30s
Lease term: 40 years

The elite prep school will open a branch for pre-schoolers through eighth-graders with a separate entrance on Pine Street at the 63-story, roughly 1 million-square-foot building.

Cushman & Wakefield’s Jeffrey Lichtenberg and Jared Horowitz represented the Trump Organization on the deal, while Green Ivy was represented by their colleagues Glenn Markman and Joseph Cirone.

“We discerned that there was a big need for a special space for schools,” Lichtenberg told The Real Deal. “We discussed this with the Trump Organization, who were very supportive, and created a separate entrance.”

Indeed, the education sector’s Manhattan footprint increased 47 percent between 2005 and 2012, with leasing activity concentrated in Midtown South and Downtown, according to a January report from CBRE.

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05/15/2013 - 08:48



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