“The market has definitely moved in the landlord’s favor,” chuckled Howard Fiddle, a broker at CB Richard Ellis.
He’s exactly right, of course. Office rents have never been higher, and tenants in need of a big block of space have nowhere else to turn.
Well, to every real-estate problem a solution! This week, Mr. Fiddle and CB Richard Ellis, which represents the landlord LeFrak Organization, will launch a campaign to market a contiguous block of 184,000 square feet on floors 27 through 34 at 40 West 57th Street.
As a sure-fire sign of how far this market has come, minimum taking rents—not asking—will be $125 per square foot for floors 27 through 32, and $140 per square foot on floors 33 and 34, Mr. Fiddle said.
Add this large swath of space to those pricey rents and this should represent the most expensive block of Manhattan office space available this summer.
The marketed rents at 40 West 57th Street are what you might expect in 399 Park Avenue or for a new tower like One Bryant Park. In this surging market, however, these are the sorts of rents one will evidently find in the 35-year-old 40 West 57th, which is just off Sixth Avenue (in a building where a lease was signed for about three times less than those prospective rents just last year).
Mr. Fiddle, who said he’s already received calls on the space, said he hopes to have a deal wrapped up this summer. Move-in will be fall of 2008.
“This is a big block of space, which is in short supply,” he said. “The views are drop-dead. Looking north, there are unbelievable views of Central Park, and there are unbelievable cityscape views.”
The tower, which was built by the LeFraks in 1972 and where the LeFrak Organization maintains its headquarters, has gone through an expansive makeover. New elevators and glittery tenants are just a few byproducts of the renovation (Nobu’s midtown home is in the basement of the building.)
The floors come to the market as a result of Bank of America’s forthcoming exodus to its tower at One Bryant Park. The financial giant moved into 40 West 57th only five years ago, so the available space comes with the extra bonus of keeping Bank of America’s furniture, which Mr. Fiddle described as “tastefully done and impeccably maintained.”
Mr. Fiddle said there’s still some debate over whether the LeFraks will take on one big tenant or divvy up the floors between well-heeled tenants like hedge funds.
Even though it hasn’t formally hit the market, the space’s size and its robust rents are already the source of conversation among brokers.
Topic A: Last year, Nautica signed a lease in the base of the building for rents at $45 per square foot, according to a source familiar with that deal. Nautica’s rents represent about three times less than what CBRE is looking for.
Mr. Fiddle disputed the rent number—he claimed it was a bit higher—and said that Nautica’s deal in the bottom of the building can’t be compared to the tower floors.
“Candidly, when that deal was done, it was below-market then—and those floors don’t have the same views down there,” he said. “It’s a very different space and it’s a good-credit tenant, and the LeFraks like to keep their tenants.”
To be sure, the Manhattan office market has made a massive leap in the last 18 months. So far this year, more leases have been signed for at least $125 per square foot than have been signed for between $100 and $124.99, according to the brokerage Cushman & Wakefield.
Even if leasing activity has slowed, tenants understand that they’ll have to pay big if they want prime Manhattan space, Mr. Fiddle said.
“This space is not even on the market and it hasn’t been advertised at all, but people are starting to learn about it and we’re already getting a number of phone calls,” he said.
With views on all four sides, a hugely respected landlord in the Lefraks and rents—no matter how high—that are still a discount from some pre-eminent Manhattan palaces like the G.M. Building or 9 West 57th Street, deep-pocketed tenants may be advised to schedule tours quickly.