POSTURING has always been a big part of negotiating and now it seems Viacom and the owners of its Times Square headquarters are ratcheting up their stances.
Sources close to the entertainment giant complained to us that, contrary to comments from owner SL Green Realty, the owner of MTV and Paramount Pictures has not agreed to renew.
In fact, according to the Viacom camp, the media giant and SL Green are at odds over the possible rent increases, are overwhelmed by ongoing construction, are underwhelmed by the design of the renovation and – ewww – are creeped out by a sudden infestation of cockroaches.
At an investor conference last week, SLG’s Chief Operating Officer Greg Hughes implied that Viacom’s 1.3 million-foot-plus renewal at 1515 Broadway was “likely” a done deal.
Viacom execs said they were “surprised” to hear Hughes’ take on the situation.
“They have certainly not made a decision as was indicated at the conference,” said our Viacom source. “They were a little surprised [to hear it said that they would likely renew].”
And even if they do renew, “it won’t be at the $85-a-foot number that SL Green indicated,” insisted our source. “They have not decided.”
Should Viacom exercise its December option to renew and the parties do not agree to the rents, they would be reset based on the “fair market value” of comparable rents in 2009 as decided through an arbitration proceeding.
“Where the market will be, as we head into the end of the year, will determine where that negotiation goes,” Hughes said at the conference. “So, the very good news is we have signed a couple of recent deals in that building for $85 a foot. And their [Viacom’s] fully escalated rent sits at $52 a foot.
“So, I think it’s likely that they stay and then it’ll just be a question of, is $52 fully escalated?,” he said. “Is that going to $60, $70 or $80? And a large part of that is going to be dependent upon what happens [in] the market over the next 12 months.”
The Viacom source also complained that the ongoing lobby refurbishment is currently “a maze of plywood. It’s hardly the first-rate renovation that SL Green is talking about.”
“They are not happy with the renderings, either. It’s creating a Harlem slumlord situation. There are cockroaches in the building that weren’t there before.”
Naturally, SLG contends that Viacom was advised of the major $160 million façade and lobby renovation – first revealed by Post colleague Steve Cuozzo.
But without a signed lease, SLG said it couldn’t agree to jazz up the redesign for the entertainment behemoth and then if Viacom splits, have to show it to prospective corporate and law firm tenants.
An SLG spokesman said the comments at the conference are consistent with what SLG has been saying for several months.
“They are very optimistic that Viacom will exercise its option and they will be pleased if they do, but they also need to go ahead with the renovations that would benefit Viacom or other new tenants if Viacom elects to leave,” he said. ”
At this point, the ticked-off Viacom is “weighing alternatives” that include Hudson Square, where it signed a deal last year for 400,000 feet at 345 Hudson St. for MTV Networks.
Michael Laginestra, Viacom’s CB Richard Ellis broker, declined to comment.
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As Thursday’s deadline looms for the bids for Starrett City, it looks as if two bidders won’t be submitting offers after they were told they weren’t “qualified” to operate the 5,881-unit com plex.
The rejected bidders – one group comprised of the Related Cos. and the NHP Foundation and the other a consortium led by Rev. Floyd H. Flake‘s Greater Allen Housing Corp. – say they plan to appeal the ruling to federal officials.
Those remaining include a team led by Westbrook Partners and a group led by Cogsville Group.
The remaining bidders are expected to offer somewhere between $600 million and $800 million – far below the $900 million expected just one month ago and just half of the $1.3 billion bid submitted for the property in 2006.
With prices dropping like glass plates from city towers, Donald Trump wouldn’t sell Starrett City at this time, he told us yesterday.
“I would say personally, ‘Hold it’ but [owner Disque Dean] will make that decision,” Trump said of the lead investor, who couldn’t be reached for comment.
“That was one of my first investments right out of college,” Trump said of the 1972 purchase.
Last year, Trump told us he was “thrilled” when the original bidding garnered $1.3 billion.*
Trevor Davis, a former partner of Aby Rosen and Michael Fuchs, is gearing up for a new development on the southeast corner of Lexington Avenue and East 65th Street.
City documents show Davis just bought the two corner buildings for $23 million and has also secured the air rights from The Canavan Institute language school at 132 E. 65th St.
The seller was designer, Barry Kieselstein-Cord, who lived in the corner building.
In contract since February, Davis seems to be planning a four-story retail-plus residential structure, but the Dept. of Buildings just dissed one scheme.
