VIACOM appears to be moving ever closer to firming up where it will call home.
Just last week, sources close to the media giant confided that execs were in “advanced discussions” to lease the entire, nearly 700,000-foot former New York Times Building at 229 W. 43rd St.
CEO Philippe Dauman even toured the funky, loft-like building last Wednesday to check out the renovation underway by owner Africa-Israel.
However, now there are signs that SL Green Realty Corp., the owner of its current headquarters at 1515 Broadway, might be trying to convince the entertainment titan to stay put.
SL Green and Viacom have been having tense negotiations over renewing the 1.3 million feet Viacom currently has at 1515 Broadway.
At issue are the asking rents in the corporate-style headquarters building, which have been sky high along with the rest of the Class A market.
Indeed, a 10-year lease signed last month with Wurk Environment garnered $83 a foot, SL Green Leasing Director Steve Durels said last week in a conference call with Wall Street analysts.
It wasn’t too long ago when asking rents were $90 a foot and SL Green execs intimated that they might renew Viacom at around $85 a foot. That didn’t sit well with the notoriously penny-pinching company.
As first revealed by my colleague Steve Cuozzo, SL Green is spending $160 million on a stunning renovation of 1515 Broadway.
But as we later reported, Viacom wasn’t thrilled with either the design or having to live through the construction.
Still, Viacom might be getting the relief it was seeking by virtue of commercial real estate now being a tenant’s market.
Indeed, Class A rents are dropping dramatically, vacancy rates are rising, and as another top broker said yesterday that no jumbo leases have been signed that would signal a bottom for that market.
SL Green CEO Marc Holliday told analysts last week rents are “probably down 10 percent on the nominal rent with a slightly bigger concession package than we would have offered a year ago.”
Viacom is also holding a great bet in the beginning of a declining market.
The company could exercise its December option to renew, and if the parties don’t agree to the ongoing rents, they will be reset through an arbitration proceeding based on the “fair market value” of comparable rents in 2009 – which so far, are heading downward.
But Viacom could bet they will reach the fully escalated $52 a foot it will be paying at the end of its lease in 2010.
The company can also send some divisions down to 345 Hudson St., where it still has room in the 394,000 feet it signed last year under a 15-year lease. It also has some 278,000 feet of short-term space at 1540 Broadway that is sparsely populated.
Viacom and SL Green declined comment.
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The United Jewish Communities is leasing 65,000 feet at 25 Broadway for the next 20 years.
The move was partially funded with a buyout of its long-term lease at 111 Eighth Ave. by owner Taconic Partners, which has cable channel Lifetime on its hook for the 67,000 foot space at a rent too high for the non-profit.
Brian Waterman, Lance Korman and James Kuhn of Newmark Knight Frank worked for over two years to get the organization out of the Eighth Avenue lease and find a more suitable location.
The end result was a deal at 25 Broadway, which lists asking rents on CoStar at $40 a foot and is represented by a CB Richard Ellis team led by Gary Kamenetsky and Richard Levine. After hemming and hawing between turning downtown’s former Cunard Building into a residential space or keeping it as an office building, owner The Wolfson Group has made great strides in leasing office space.
The Jewish Education Service of North America (JESNA), an organization that was subleasing space from UJC, signed a 20-year lease to move into the entire 13,500-foot, fifth floor of 318 W. 39th St., which had an asking rent of $35 a foot.
Carri Lyon and Robert Baraf of Cushman & Wakefield repped JESNA in the move to the entire fifth floor of 13,500 feet.
Brian Steinwurtzel and Neil Joffee of Newmark Knight Frank worked on the deal for owner Jeff Gural.
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Sexy women’s fashion shop bebe leased 5,000 feet on the ground and 3,700 feet on the lower level of 488 Broadway in SoHo.
Robert K. Futterman & Associates’ Karen Bellantoni and Robin Sande represented bebe with colleagues Jeff Fishman and Ariel Schuster negotiating for building owners Arthur and Deborah Kaufman of Broadway Landmark Realty.
This is bebe’s fifth Manhattan store.
