In a significant boost to its Midtown portfolio, SL Green Realty Corp., the city's largest office landlord, has completed two major lease agreements near Grand Central, affirming confidence in the New York office market despite ongoing pressures. The firm solidified Travelers Insurance Co.'s commitment to 485 Lexington Avenue by renewing their lease for a decade, a sizable agreement encompassing approximately 123,000 square feet across the eighth, ninth, and a portion of the seventh floors of the building. Crain's New York reports this deal represents nearly 15% of the property's space.
Although the specifics of Travelers' rent were not disclosed, rates in the area hover around $60 per square foot annually, according to SL Green's recent filings. The ongoing office market slowdown has affected occupancy at the 485 Lexington Avenue tower, which currently stands at 84%. Analysts believe this figure might signal distress for a prime office property. While an SL Green spokeswoman told Crain's New York, "We've just resecured the anchor tenant on a long-term basis and have high hopes for the building’s future," the high vacancy rate persists, casting a shadow on the building's financial health.
Conversely, SL Green has reported far more unambiguous success with 100 Park Avenue, thanks to a major 15-year lease signed with Alvarez & Marsal Holdings for 220,000 square feet, catapulting the building's occupancy rate to an impressive 96%, signaling a substantial turnaround from the previous year's occupancy woes. According to Crain's New York, the global consulting firm will now occupy a significant portion of the postwar building's office space.
Additionally, SL Green has been actively managing its financial instruments and property interests at 100 Park Avenue, modifying the existing $360.0 million mortgage which has its final maturity date now extended to December 2027, and securing a new $70.0 million future funding facility to support leasing costs; this strategic financial wrangling points to SL Green's proactive approach in managing its assets and liabilities amidst the company has also opted to purchase its partner's 49.9% stake in the property, further consolidating their hold on this prominent piece of real estate. According to a statement obtained by TipRanks, the negotiations for the mortgage modifications and the purchase option were advised by industry experts from Newmark and CBRE respectively.
