During Q1, SL Green signed 32 Manhattan office leases totaling 296,840 square feet with average starting rents of $52.71 per square foot. Occupancy for the Manhattan portfolio, including both office and retail, was 96.2% as of March 31, compared to 96.7% at the end of '08. In SL Green's suburban portfolio, occupancy was 90.4% at the end of Q1 '09--an identical rate as Q3 '08. During the quarter, the company signed 32 leases in the suburban portfolio totaling 124,090 square feet, of which 29 transactions and 123,110 square feet came from office leases.
The second quarter has gotten under way with more Midtown office deals, including two that GlobeSt.com reported last week at 100 Park Ave.: an expansion of Wells Fargo Trade Capital's existing lease and the signing of First Wall Street Group for 15,945 square feet. On Tuesday, SL Green announced today Insight Communications--a longtime tenant at 810 Seventh Ave.--renewed its 34,640-square-foot lease for the top two floors there.
Insight's deal is for five years plus; asking rents for the upper floors of the 41-story tower are $65 per square foot. Patrick Heeg of Jones Lang LaSalle acted on behalf of Insight, a telecommunications and cable company, while SL Green's Christopher Gulden represented the landlord.
The property at 810 Seventh was one of three New York City office buildings on which SL Green just completed a capital improvements program. The program--totaling $40 million for the three properties--also encompassed improvements at 711 Third Ave. in Manhattan and 16 Court St. in Brooklyn.
In the case of 810 Seventh, a highlight was the use of sustainable building materials in the redesign. At 711 Third, the 200-square-foot mosaic mural around the lobby's elevator core, created in the 1950s by artist Hans Hofmann and featuring 500,000 Venetian glass tiles, was restored as part of a $10-million renovation. A $17-million program for 16 Court focused on redeveloping the lobby along with other renovations.
During Q1, SL Green repurchased about $225 million of its unsecured notes and exchangeable bonds in 2009. Since last October, the company has bought back approximately $487.5 million of its bonds, and realized gains on early extinguishment of approximately $135 million, according to financial documents.
As GlobeSt.com reported on Monday, Gramercy Capital Corp. completed the internalization of its management by acquiring its external manager, GKK Manager LLC, previously a wholly owned subsidiary of SL Green. As of March 31, the book value of SL Green's investment in capital was zero, according to SL Green. A short-term transition agreement will remain in place between Gramercy and SL Green.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
