NEW YORK CITY-In an effort to reduce its operating expenses, music licensing and rights management firm the Harry Fox Agency Inc. will move from its current space at RXR Realty’s Starrett-Lehigh Building to a 36,921-square-foot space at the Trump Building come second quarter 2012. However, this relocation wasn’t your typical lease transaction, according to Studley, who represented HFA on the deal.
In a multi-faceted series of events, the firm first signed an agreement to terminate its 47,144-square-foot, fifth-floor sublease from Tommy Hilfiger USA at Starrett-Lehigh. According to Studley, this culminated in a direct lease expansion between RXR and advertising firm McGarryBowen, an existing 130,000-square-foot tenant in the building that was seeking to expand.
McGarryBowen, who was represented by David Hollander and Sacha Zarba of CBRE, will take over the 47,144-square-foot HFA space. Meanwhile, RXR amended Tommy Hilfiger’s master lease, terminating that portion of their space and taking back 21,000 square feet of sublease space from an adjacent fifth-floor subtenant, Lord & Taylor. RXR also amended Hilfiger’s master lease to include that 21,000 square feet, for a new total of 350,000 square feet, Studley says.
“We engineered the entire structure so that it could satisfy the needs not just for Harry Fox, but also for McGarryBowen who needed more space, for Tommy Hilfiger who needed more space, for Lord & Taylor who did not need their 21,000 square feet anymore and for the landlord to receive market rents,” says Greg Taubin, senior managing director at Studley, in an interview with GlobeSt.com. “We had to go back out into the market on a parallel process so that while we’re negotiating the termination of their sublease with Tommy Hilfiger, who at the time McGarryBowen was negotiating with the landlord to take over the Harry Fox space on a direct basis.”
Seeking a more cost-efficient space to suit HFA’s needs, Taubin explained that the tenant searched for alternative locations in Midtown South, but given the tight nature of the market, the cost-savings “were there” but “not great,” he says. As a result, Lower Manhattan came into play.
“We found substantial annual cost savings on the real estate going forward for the next 14 years,” Taubin says. “In addition to that, the alternative down at the Trump Building gave us a full floor and the landlord will be turn-keying the space so that in effect, it reduces any minimal out-of-pocket costs for the actual move itself.”
Asking rents were not disclosed, but a source close to the deal says the pricing ranged in the high $20s to low $30s per square foot. The 72-story building—designated as a New York City landmark in 1998—recently became home to a 22,000-square-foot Duane Reade within the building’s former ground bank space.
As a whole, Taubin described the transactions as “interconnected” and a “win-win” for all parties involved. “It was a lot of hard work and a lot of time,” he says. “The other real estate advisors for the other tenants were very good advisors across the board and everyone had an incentive to get the deal done.”
In a statement, Gary Churgin, CEO of HFA, commented: “By relocating to a world-class Trump building, we realized we could get the best of both worlds: significant cost savings, plus, brand-new, state-of-the-art office space that fits our needs even better than before.”
40 Wall Street was represented in the transaction by Jared Horowitz, Jeffrey Lichtenberg and Andrew Peretz. Tommy Hilfiger was represented in the transaction by Matthew Astrachan of Jones Lang LaSalle; Lord & Taylor was represented by Rob Silver of Newmark Knight Frank; RXR was represented in-house by Bill Elder.
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