If 2006 was a year that confirmed downtown’s renewed relevance, then what a way to finish. In one of the largest deals of last year, the insurance giant AIG has signed a 250,000-square-foot lease at Financial Square, at 32 Old Slip.
The deal was finished late last week, with AIG and the building’s owner, the Paramount Group, racing to complete it before the year closed.
AIG has been actively looking for space for months, but for something closer to 100,000 square feet—not a deal of this size.
“The deal started off a much smaller deal, but then over the last four to five weeks it grew to 250,000,” said Frank Cento, a broker at Cushman & Wakefield, which represented the landlord.
“It all got done in five or six weeks,” he added. “This was fast.”
Mr. Cento said AIG would take seven floors, which includes the sixth floor, the 19th through 22nd floors, and the 27th and 28th floors. Move-in dates will be staggered through March 2007.
He declined to speak about the terms of the deal, but described the lease as long-term. The deal brings Financial Square to 95 percent occupancy.
The asking rent in the building for floors 19 through 22 was $49 a foot, according to a market report.
For real-estate wonks, this lease is even further evidence of one of 2006’s clearest trends: Downtown is back, and it had a very big year.
Of the 12 largest leasing deals completed downtown since Sept. 11, 2001, five were signed in 2006, including this one.
And once the numbers are added up and presented at corporate breakfasts next week, the AIG deal should land in the top 10 biggest city leases of 2006.
The deal is especially good news for the Paramount Group. The owners of Financial Square were flirting with the idea of converting the office space to residential as late as last summer, before the landlord realized how significantly the market was turning, according to a downtown broker who was not involved in this deal.
A spokeswoman from the Paramount Group denied this conversion claim.
For AIG, this is one of a series of deals that the company made downtown in the last year.
AIG signed a pair of leases in the third quarter of 2006. One was for an expansion of 80,000 square feet at 40 Wall Street; the other was for its subsidiary, Royal Alliance, for a 10-year lease of 82,000 square feet at 1 World Financial Center. That deal has rents of $41 a foot for the first five years and $46 a foot for the last five, according to a source.
AIG already has space downtown, including its headquarters at 70 Pine Street.
Financial Square is a 36-story glass tower built in 1987. The building is a block south of Wall Street and rests along the shore of the East River. It has 1 million square feet, and its major tenants include Goldman Sachs, Daiwa Securities and the Bank of New York.
Lewis Miller, Andrew Sussman, John Powers and Scott Sloves of CB Richard Ellis represented AIG. They declined to comment. Arthur Bocchi from the Paramount Group also represented the landlord.
THE NEWS HASN’T BEEN FUN AT VNU, the media and data company that publishes Billboard and Advertising Age.
After being purchased for $9.7 billion by a group of private investors, VNU announced that it is looking to cut its cost base by about 10 percent.
The way for any company to do that, of course, is by cutting its two biggest expenditures: people and real estate.
The company announced right before Christmas that 4,000 employees would be cut. And what about the future of its real estate?
VNU has more than 600,000 square feet at 770 Broadway, and according to its broker, Bob Giglio of Cushman & Wakefield, just about everything is on the table.
“Basically, as a corporation, they are looking to run more efficiently, and they’re looking how to do that real-estate-wise,” said Mr. Giglio.
That could mean anything from subleasing space at its home near Astor Place to taking a good portion of its 600,000 square feet and relocating some back offices.
All options are open—maybe even, say, Brooklyn?
“There’s been no firm decisions with what they’re doing,” Mr. Giglio said. “It’s a fluid process, and they’ll make the decision within the best interest of the company.”
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