One World Trade Center: How the Lease That Could Trigger Downtown's Revival Took ShapeMar 6, 2012
It’s been almost a year since the long-in-the-making landmark 25-year, $2 billion lease to bring Condé Nast to One World Trade Center was signed.
That deal has already begun to reshape Manhattan’s office leasing market by removing some of the stigma that Downtown has gotten. Prospective tenants have been more willing to consider space downtown since May. And Condé itself has increased its commitment. It will take an additional 116,000 sq. ft.—on top of the 1.05 million sq. ft. it had already signed on for—at the tower. Overall, that means Condé will inhabit more than one-third of the office space in the tower.
Condé plans to move in 2014, when the tower opens. Government and private tenants are also filling the space with the Government Services Administration negotiating for a 300,000-sq.-ft. lease.
Two key brokers in the transaction—Tara Stacom, Cushman & Wakefield’s vice chairman, and Gregory Tosko, CBRE’s vice chairman—say the Condé Nast lease has legitimized One World Trade and triggered further interest in Downtown.
Stacom is the co-leasing agent, along with developer The Durst Organization, for the site; Tosko, along with Mary Ann Tighe, CBRE CEO of the New York Tri-State Region, represented Condé Nast.
“More tenants are looking at it. It helped legitimize it as an opportunity for folks,” Tosko says. It has also altered the perception that Downtown Manhattan is only desirable for financial firms, Stacom adds.
“Here is a global communications company selecting downtown. It has opened a new dynamic. And now have several internet companies and publishing firms have picked downtown. This deal opened their eyes.”
Getting Condé Nast on board did not come without its twists and turns. Tosko recalls that Condé has some initial hesitancy. “A lot of people would say, ‘Thanks for the idea, but I’m not sure if it’s for me,’” Tosko says. But Condé spent some time trying to understand the project and became interested.
The opportunity to be seen as a trailblazer didn’t hurt either, Stacom adds. That resulted in the initial term sheet being signed in 2010; then a lot of hard work was done to reach the final agreement. “Normally when you get to the stage we reached with Condé, the building already has cleaning specs and other specifications done,” says Stacom. “But all of that was being vetted as we were negotiating the transaction.”
Condé Nast was also drawn by the space’s greater flexibility. One World Trade boasts column-free floors and floor-to-ceiling windows, meaning 90 percent of employees will benefit from natural light.
The Durst Organization helped clinch the deal by signing a joint venture agreement with the Port Authority of NY/NJ in 2011 and bringing a $100 million equity commitment to the project. That was key for Condé since Durst also manages Condé Nast’s current home: 4 Times Square.
“I got selected in 2007 to be agent, but I harped away that they had to have a joint venture partner that was class-A quality,” Stacom says. “The tenants needed to be comfortable that the partner was going to operate, manage and build it. And Durst is just stellar. Their role in all of this was instrumental.”
Looking back, Tosko says there’s some added satisfaction to being involved with a deal of this magnitude. “It’s an interesting mix of feeling very good about what a deal does for the city in addition to how it was a huge benefit for our client,” he says. “Now that we’re 10 months removed from the completion of deal, I just feel even better about it. And I think everybody else feels that way too.”
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