NEW YORK CITY-Lower Manhattan got a major vote of support after financial services giant Morgan Stanley affirmed its commitment to the Financial District, taking a 1.2-million-square-foot lease at Brookfield Office Properties’ One New York Plaza, representing the largest single-asset office lease in New York City since 2008, the company confirms to GlobeSt.com.
Under the deal, Morgan Stanley has gone from a sublease to direct space at the 50-story, 2.6 million-square-foot tower. Previously, the company subleased space with Wells Fargo for approximately 782,000 square feet and a direct lease with Brookfield for 34,000 square feet, making Morgan Stanley’s total footprint around 816,000 square feet in the Downtown skyscraper.
Dennis Friedrich, president and global chief investment officer at Brookfield Office Properties, tells GlobeSt.com that the sublease between Morgan Stanley and Wells Fargo was set to expire at the end of 2014—and the tenant “made the decision to commit long-term” and “invest in the space.”
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“They wanted a direct relationship with Brookfield as landlords,” he says, explaining that as part of the new direct lease, the financial services firm will expand its footprint by approximately 337,000 square feet for a 15-year term, making their entire lease 1,153,000 square feet expiring in 2029. Morgan Stanley's existing floors are 3-12, 18 and 32, and their new floors will be 21, 35, and 37-41, bringing the building to approximately 85% leased, a Brookfield spokesman says.
Describing the transaction as a “great validation” for the Downtown office market, Friedrich says the deal is another example of major firms are viewing Lower Manhattan “as a very attractive space alternative in terms of drawing personnel,” joining others such as Conde Nast, the New York Daily News, Moody’s, Omnicom and more. “It is certainly a vote of confidence,” he adds.
Morgan Stanley, which maintains its world headquarters at 1583 Broadway in Times Square, will utilize the space for additional office operations in the Financial District. Friedrich says asking rents are confidential until the information is publicly disclosed.
The deal comes shortly after a sleepy first quarter in Manhattan, where Downtown leasing velocity showed strength, but rents have remained flat. But Friedrich says that will change.
“There’s a perception that things have really slowed down a bit and the first quarter was a little bit disappointing, but this is a great way to kick off the second quarter,” he says. “It’s really yet another validation that there’s another big transaction for Lower Manhattan. For Morgan Stanley to make a decision of this magnitude to house a big part of their employee base in Lower Manhattan is a huge positive.”
Morgan Stanley was represented by a Newmark Knight Frank team of Barry Gosin, Brian Waterman and Romel Canete. Jerry Larkin and Duncan McCuaig represented Brookfield in-house on the deal, while a legal team of Stuart Mass, Russ Rabinovich and Noah Shapiro of Haynes and Boone, LLP advised Brookfield.
NKF declined to comment beyond a news release for this story.
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