WTC’s 1 MSF Condé Nast Lease to Lead Downtown’s Return to Glory
- May 27, 2011
May 26, 2011
By Barbra Murray, Contributing Editor
New York City’s office market has been in the slow-but-sure post-recession rebound mode for the last several months but the long-awaited announcement of Condé Nast’s advance commitment to 1 million square feet at the new 3 million-square-foot World Trade Center has created such a buzz that industry experts believe it will kick the recovery of Manhattan, and downtown in particular, into high gear.
Commercial real estate services firm Cushman & Wakefield acted as exclusive leasing agent for the $3.1 billion property’s developers, The Port Authority of New York and New Jersey and The Durst Organization. CB Richard Ellis is the firm that guided the publishing giant to its future home on floors 20 through 41 at the 71-story One WTC after searching high and low in Manhattan to identify the best options for a contiguous 1 million square-foot block of premier office space.
“The beginning of the search was five-and-a-half years ago,” Gregory A. Tosko, vice chairman with CBRE’s consulting services group, told CPE. Tosko, along with CBRE New York state tri-region CEO Mary Ann Tighe, acted as lead brokers on the deal. Tighe represents Conde Nast.
There was ample time to do it right, he said. “They didn’t have to leave. Their lease wasn’t expiring. They have nine years left on their lease and they were happy in Times Square, but they wanted to solidify their long-term occupancy in a way that was right for the company.” Condé Nast will relocate and consolidate thousands of employees from various offices in Midtown, including their headquarters at the approximately 1.6 million-square-foot Durst-owned building at 4 Times Square, where the magazine publisher settled into 650,000 square feet in 1999.
WTC, for all its impending prominence, was not necessarily at the forefront for consideration in the beginning of the big office hunt. “It was a bit of a meandering path,” Tosko said. “We think there was some reticence initially about downtown. With regard to this lease, downtown and the World Trade Center are inseparable. The Financial Center and the Transportation Hub, up until not long ago, seemed more conceptual, and you heard about so many difficulties. But there’s been a lot of progress that’s been going on down there over the last couple of years.”
The consensus among industry experts is that the publisher’s relocation to WTC will have an impact that would best be described as déjà vu. “Condé Nast is definitely a market leader and they’ve been a trendsetter before, in Times Square, and with that came a renaissance,” Tara I. Stacom, vice chair with Cushman & Wakefield, told CPE. “The same momentum will occur with Condé Nast’s lease downtown.”
Condé Nast predicts the same. “They think ahead of the curve.” Tosko noted. “Having done it with 4 Times Square gives them confidence that they can help with progress downtown.”
Actually, the importance of Condé Nast becoming the lead tenant at One WTC became evident well before the lease deal was signed, sealed and delivered. “Other businesses have signed leases in the area in anticipation of the Condé Nast lease,” Stacom noted. “Without question, when news first broke of Condé Nast’s interest in the World Trade Center and when the joint venture with Durst was announced, it enhanced interest in the site.” Last August, real estate owner and developer Durst acquired an equity membership interest in One WTC. “The Durst addition allows greater comfort for those who are more accustomed to a quality, experienced office entity like Durst. It gave greater credibility to the asset.”
Prior to confirmation of the Condé Nast transaction, other businesses may have felt the same reticence about downtown that the publisher experienced at the outset of its office space quest. Now, real estate experts predict that the official announcement of the agreement will lure more prospective tenants to One WTC and downtown in general. “This deal has the potential to drive the market,” Tosko said. “At a minimum, it will be a stamp of approval to go and look.”
And it is widely expected that many businesses will take their search beyond the tour. “There’s limited new construction,” Stacom pointed out. “Tenants are realizing that the best product will go fast. It’s very possible that the building could end up fully rented the day it opens.” The skyscraper is on track to reach completion in 2013.
A specific date has not been set for Condé Nast’s relocation, but the company is on schedule to make the move in 2014 or 2015.