Law firm Orrick Herrington & Sutcliffe was expected Thursday to sign a lease for approximately 220,000 square feet at CBS’ 38-story granite slab known as Black Rock, at 51 West 52nd Street, according to industry sources.
As part of the deal, Orrick is taking the space being vacated by UBS and Cushman & Wakefield, which will consolidate its midtown offices at 1290 Avenue of the Americas. Sources say that UBS paid more than $32 million to terminate its lease early, money which CBS applied to the Orrick deal to absorb the costs of Orrick’s build-out of the noncontiguous space to the tune of $150 a square foot, and which will reduce the firm’s rent in the building.
This deal is the finale of a seemingly epic office-space search for the law firm, which has found itself in the precarious position of scouring a rapidly changing real estate market while also navigating a rapidly changing legal industry—one in which the firm has been forced to implement layoffs. Last year, Orrick was this close to signing a lease for 300,000 square feet at Boston Properties’ Citigroup Center when the deal fell through on the day of the collapse of Lehman Bros.
Kushner Companies principal Jared Kushner owns this newspaper as well as the building at 666 Fifth Avenue that Orrick will be vacating; the firm occupied about 240,000 square feet of space built out for law-firm use at 666 Fifth.
“We were competing to keep them,” said Arthur Mirante, president of Global Client Development at Cushman & Wakefield, who is representing Kushner Companies at 666 Fifth. He pointed to the “huge amount of dollars” that CBS contributed to the transaction as a reason for Orrick’s deal at Black Rock.
“Even though it was technically a direct deal, it was really a sublease,” Mr. Mirante said of Orrick’s deal with CBS. “In any kind of marketplace, a landlord with direct space can’t compete with the sublease market.”
Newmark Knight Frank‘s Aaron Katz, who represents Orrick, did not respond to a request for comment. Neither did Orrick, nor Frank Doyle, of Jones Lang LaSalle, who represents CBS.