A decision last week by law firm Cadwalader, Wickersham & Taft to lease 450,000 sq. ft. at One World Financial Center was terrific news for lower Manhattan and WFC landlord Brookfield Properties, but quite the opposite for Boston Properties (BXP). Cadwalader reportedly mulled over moving into Boston Properties’ Times Square Tower building, which is reeling from 77% vacancy. Anchor tenant Arthur Andersen backed out of its 15-year lease in the building in 2002, leaving BXP with a vacant building caught in a difficult leasing market.

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BXP — a publicly traded REIT — has tried to market space in the Times Square Tower to other law firms, but its efforts have only yielded one firm: O’Melveny & Myers LLP.

Reports suggest that BXP is demanding high rental rates in a depressed market. In fact, law firm Clifford Chance LLP negotiated with BXP for space in the tower but ultimately signed with Macklowe Properties’ 340 Madison Avenue where rents were $15 per sq. ft. less.

Law firms aren’t the only prospective tenants passing up space at the Times Square Tower. Both Bank of America and IBM tested the waters, only to lock in space elsewhere.

According to CoStar, BXP’s existing midtown office portfolio had 637,432 sq. ft. of vacant space — 10% of its portfolio — as of mid-September. But if the 1.2 million sq. ft. Times Square were in service, a staggering 24% of BXP’ New York portfolio would be vacant.