Traditionally a doldrums, the period before Labor Day has been enlivened by no fewer than three such leases in the space of a week. Electronic trading firm Instinet last week signed on for three full floors totaling 100,000 square feet at the Blackstone Group's 1095 Ave. of the Americas. Rudin Management announced on Tuesday that longtime subtenant Loeb & Loeb had committed to 20 years and 155,000 square feet at 345 Park Ave., while in the year's largest new lease, Gap Inc. is consolidating its New York offices into 265,083 square feet at 40 Worth St.
Earlier in the summer, law firm Orrick, Herrington & Sutcliffe subleased 210,000 square feet at 51 W. 52nd St., Bonnier Corp. converted a longtime sublease into a 10-year direct lease of 100,750 square feet at 2 Park Ave. and Bank of America renewed 114,000 square feet of former Merrill Lynch space at 717 Fifth Ave. until 2014. In another Fifth Avenue deal, the FDIC signed on for 102,000 square feet at the Empire State Building. These deals followed the 240,930-square-foot, 10-year renewal at 51 W. 52nd St. by law firm Wachtell Lipton Rosen & Katz and Showtime Networks re-upping for 15 years on its 202,495-square-foot space at 1633 Broadway.
In the view of Jeffrey Gural, chairman of Newmark Knight Frank, the flurry of high-profile activity is inevitable--and will continue over the next several months. "Most tenants perceive that rents have declined and they can afford to gamble a little," Gural, whose firm figured in the Gap and Instinet deals, tells GlobeSt.com. "However, a certain number of leases are expiring and there's a timetable that you have to work backward from, especially on major leases like the Gap. They need a year or more to analyze their options and space planning and get the space built."
In fact, 2010 will see lease expirations totaling more than 20 million square feet in Midtown alone, according to a recent report by CB Richard Ellis. "As leases expire, tenants will either renew or relocate," says Gural. "Probably the most foolish thing a tenant could do today would be to extend for two years. I know some are pondering doing that, but for a landlord, that's the best thing a tenant can do, frankly. Some tenants are saying 'I'll worry about it in two years and hopefully things will be better then,' but any tenant that's got a good broker is better served by trying to lock in a long-term deal now."
The Gap lease, reported on Tuesday by the New York Post, supplants the clothing retailer's current office locations at 620 and 675 Ave. of the Americas. Gap Inc. plans a two-stage relocation beginning next year into 40 Worth, which is owned by a Newmark partnership including Gural and where a Newmark team including vice chairman Barry Gosin, senior managing director Roy Lapidus and managing director Daniel Segal handles the leasing. The tenant was represented by CBRE EVPs Eric Deutsch and Ken Meyerson.
Loeb & Loeb's direct lease adds another floor of 36,000 square feet to its existing 119,000-square-foot sublease at 345 Park. In a release, Loeb & Loeb co-chairman Michael D. Beck calls the Rudin property "the ideal place for us to continue to build our national and global practices, and to service our clients." A CBRE team including vice chairmen Brian Gell, Lewis Miller and Kenneth Rapp represented Loeb & Loeb, while Rudin SVP Tom Keating represented the owner.
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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.
