NEW YORK CITY-The New York office of Hines announced Monday that Simpson Thacher & Bartlett LLP has executed an agreement to renew its lease for 595,000 square feet at 425 Lexington Ave.
Encompassing 26 floors of the 31-story building in Midtown, the lease will be reset to expire in 2033. Lewis Miller, vice chairman, brokerage services, Ken Rapp, vice chairman, global corporate services and Ramneek Rikhy, VP of CBRE represented Simpson Thacher in lease negotiations, while Hines represented the owner, its Hines US Core Office Fund.
Simpson Thacher's previous lease wasn't set to expire until Oct., 2018, Tommy Craig, Hines' senior managing director for the New York office tells GlobeSt.com. However, Hines put the building up for sale in February and the tenant likely wanted to lock in stability, he says.
“The firm was interested in a long-term occupancy and our focus was on higher proceeds and more certainty. It was a situation where their objectives and ours were closely aligned.”
Adds Simpson Thacher COO Michael Hersch in the announcement, “We have been pleased to be a tenant at 425 Lexington under Hines' ownership, and we are happy to have secured 425 Lexington to serve as our world headquarters for at least another two decades.”
The lease renewal boosts the appeal of the asset, says Craig. “A lease with these terms takes an asset that's naturally a core asset—given its location, and the fact that it's relatively new construction for the area—and creates financial stability. We believe it'll expand interest on the property.” In fact, while GlobeSt.com spoke to Craig on the day the lease was announced, he says “we're encouraged by the interest.”
The move also enhances Hines' efforts to sell another one of its properties, 499 Park Ave., which is available to buyers either as a single buy or in a joint arrangement with the Lexington Avenue asset. The two are being jointly marketed by Eastdil Secured and CBRE.
Eastdil Secured's senior managing director Douglas Harmon notes in the announcement, “Simpson Thacher's renewed commitment to 425 Lexington dramatically highlights the attractiveness of the asset while solidifying and stabilizing the long-term returns to an investor.”
Darcy Stacom, vice chairman of CBRE Investment Properties adds in the release, “425 Lexington is a gem in the market, and with the lease renewal, the investment fundamentals are befitting this trophy asset. This is an enormous vote of confidence in the long-term value of this Midtown icon.”
One of the newest buildings in the Grand Central market, the 750,000-square-foot 425 Lexington Ave. spans the entire easterly block front between 43rd and 44th streets and is situated directly across from Grand Central Terminal and the Chrysler Building.
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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.
