The numbing onslaught of bad real estate news shows no sign of abating.
Real Estate Weekly is reporting that Centerline — the real estate investment firm headed by Related Companies’ Stephen Ross that the Wall Street Journal recently reported was in danger of defaulting — is negotiating with Blackstone Group to wriggle out of its 100,000 square foot lease at 1095 Avenue of the Americas.
In 2007, Centerline clinched a deal for the third, fourth and fifth floors, totalling 100,000 square feet, at the hefty price of $125 a square foot (the price ultimately rose to $140 a square foot). The big numers were ostensibly justified by Blackstone’s aggressive repositioning of the building, which includes a gut renovation and a brand new curtain wall.
But then the credit crisis hit, Centerline got slammed, and the deal began to look less advantageous.
Centerline wasn’t the only firm to have second thoughts, according to REW:
…About six months before Centerline signed its deal at the end of 2007, the real estate financing REIT iStar Financial took a little over 100,000 square feet, the entire 35th, 36th, and 37th floors for rents that begin at $132 per square foot and climb incrementally to $148 per square foot over the life of the 15-year deal.
Late last year iStar too had buyer’s remorse after a rough earnings period in the fourth quarter and decided to sublease the entire block of space. Almost a year later, the company is said to be increasingly eager to find a taker for the space and brokers say that it is offering to sweeten the deal by building out offices for a user.