NEW YORK CITY-After a stalled effort to negotiate a lease at 11 Times Square (or 11 Times Square Plaza), Microsoft has reportedly circled back to the troubled building and signed an agreement to rent 230,000 square feet, according to the Commercial Observer and the Real Deal. The move comes in the wake of Microsoft previously walking away from negotiations with the building and then coming close to making a deal at 250 W. 55th St, say the reports.
Law firm Kasowitz Benson represented Microsoft in the deal. A team from Jones Lang LaSalle, led by Mitch Konsker, allegedly was behind the effort to bring Microsoft to the building, which was developed by Parsippany, NJ-based SJP Properties and Madison, NJ-based Prudential Real Estate Investors for $950 million, and is run by the two firms.
SJP struggled to fill the 1.1-million-square-foot building after opening in 2010 during the worst of the Great Recession. Its first tenant, law firm Proskauer Rose LLP leased a third of the building before it even opened but it didn't sign another tenant until this past May, when Global Food International Corp., a Russia-based worldwide restaurant chain, signed a lease for approximately 25,000 square feet on the ground floor and mezzanine level of the building's retail space to open a restaurant with international cuisine. Several retailers considered the space, at least when it was still in development, including CVS, Buffalo Wild Wings and even a developer looking to build an aquarium, according to greenbuildingsnyc.com, but none signed on.
In the interim, the lack of interest in the building prompted SJP to file paperwork this past January aimed at converting the 40-story tower into two commercial condominiums, according to the NYC Dept. of Buildings. The status of that filing was unclear at press time. A spokesperson for SJP did not respond to requests for comment. Representatives at Kasowitz Benson didn't return calls.
Microsoft has been on the hunt for new space for several months because its lease at the Vornado Realty Trust-owned 1290 Ave. of the Americas is set to expire in 2014, according to the New York Observer. Vornado reportedly offered Microsoft a sweetheart deal in an effort to secure a renewal from the company, as well as a commitment to renovate. That spruce-up already has begun, with a complete update to the lobby of the 2.1 million-square-foot building, the Deal reports.
Meanwhile, Microsoft was in talks with 11 Times Square but walked away from the table after the company deemed the asking price to be too high, and because of signage issues, according to the Deal and the Observer. It then had its sights set on Boston Properties' 250 W. 55th St., which is not yet finished, but was dropped after law firm Kaye Scholar nabbed the space, as reported on Wednesday. Perhaps trying to capture some youth appeal—as it has fallen from grace while competitors like Google, Facebook and Apple became the dominant players in technology and Internet products—Microsoft also was said to have considered 51 Astor Place, now under construction, at some point but ultimately decided to remain in the heart of downtown.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
