NEW YORK CITY-SJP Properties’ $1.2-billion spec office tower at 11 Times Square, which broke ground just before the first rumblings of the commercial real estate downturn, has signed an anchor tenant three years later. A spokesman for CB Richard Ellis, which is handling the leasing at the 40-story tower, confirms published reports that law firm Proskauer Rose has inked a deal for approximately 380,000 square feet, but tells GlobeSt.com that he cannot comment beyond that confirmation. Proskauer's spokesman tells GlobeSt.com his firm plans to make a formal announcement on Tuesday.
The New York Post said Monday afternoon that the Proskauer lease had been finalized over the weekend, following earlier reports in both the Post and the New York Times that a deal was imminent. A term-sheet agreement on the space was reported in the Post this past January. Spokeswomen for both SJP and Prudential Real Estate Advisors, its financial partner on the project, declined to comment on Monday’s Post report.
Proskauer is currently headquartered at the Morgan Stanley-owned 1585 Broadway. According to multiple published reports, the move to 11 Times Square is in effect being subsidized via an undisclosed sum from Morgan Stanley, which will use the 12 floors Proskauer currently occupies to facilitate its own expansion. Rents for the 11 Times Square deal are believed to be in the mid-$70s per square foot, some 25% to 30% less than the property’s owners had hoped for two years ago, according to the Post.
The deal, which comes as construction on 11 Times Square is nearing completion, marks a vindication for SJP, whose decision to build the high-profile, 1.1-million-square-foot tower without any pre-leasing was greeted with skepticism when 2008 and 2009 came and went without any deals being signed. It also bears out a prediction CBRE’s Robert Alexander made at the start of ‘09. With the Wall Street meltdown fresh in everyone’s minds, Alexander, chairman of CBRE’s tri-state region, predicted that the property would "absolutely lease up" on grounds that it represents brand-new product.
As GlobeSt.com reported last year, Proskauer had reportedly committed to space at Boston Properties’ planned one-million-square-foot office and retail project at 250 W. 55th St., with the law firm reportedly agreeing to 500,000 square feet there. However, the project was suspended in February ’09 after the REIT announced that a major law firm tenant, which it did not identify, said it was "unable to proceed" on the lease terms. Gibson Dunn & Crutcher reportedly had also planned to take space at 250 W. 55th, but ended up renewing and expanding at 200 Park Ave. instead.
Proskauer’s lease is the latest in a series of large office relocation deals since the start of the year. In January, Avon Products took 246,500 square feet at the William Kaufman Organization’s 777 Third Ave. for its headquarters space, moving from 1251 Ave. of the Americas. That same month, Hachette Fillipachi moved from 1633 Broadway into 132,000 square feet of former Lehman Brothers space at 1271 Ave. of the Americas. Tiffany last month consolidated from three Midtown locations into a 260,000-square-foot berth at 200 Fifth Ave., and on Monday service employees union 32BJ announced a relocation from 100 Ave. of the Americas into 245,000 square feet at 620 Ave. of the Americas.
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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.
