The United Nations leased the entire 187,000 square feet in the Albano Building in June to serve as space in which to relocate 700 employees that would be dislocated from the organization’s signature East Side headquarters, the Secretariat Building, during a planned renovation of the tower that would begin in 2009. 

But with that project already swelling over budget, the United Nations is said to be close to adopting an expedited construction plan that would shave costs, but also require as many as 1,700 additional employees to be moved out of the building and relocated to temporary offices.

The larger relocation would be needed under the new plan because it calls for the entire building to be emptied and renovated all at once, rather than in the phased ten floor at a time approach of the current construction plan that would allow most of the building’s staff to remain on the premises while the work is being done.

Werner Schmidt, a spokesman for the United Nations Capital Master Plan, which is the office within United Nations responsible for overseeing the renovation work as well as leasing the swing space the organization would need, estimated that the United Nations would have to lease more than 450,000 square feet to accommodate the staff.

“As soon as we get approval from the UN General Assembly, we plan to get a lease signed within a few weeks,” said Vivian Van De Perre, chief of administration and communications for the capital master plan. “We are looking for the space now and are already speaking with landlords.”

Van De Perre said that the United Nations is looking at locations in midtown and Lower Manhattan, but not in Long Island City, where there are abundant large blocks of inexpensive space including a large sublease being offered by MetLife, because the district is too far from its East Side campus. 

The United Nations is currently negotiating to lease 42,000 square feet of space in the newly constructed United Nations Federal Credit Union Building in Long Island City for IT staff that will have to move for the renovation and also 60,000 square feet of warehouse space in the Falchi Building for portions of its library.

The Albano Building, although it is considered an antiquated property, was hailed by many real estate experts as a homerun deal for the United Nations because it is located just a block away from its campus and had rents in the $40s per square foot – a pittance compared to the rest of midtown where rates average in the mid $80s per square foot for higher-end class–A space.  The United Nations will also be the only tenant in the building, which its spokespeople have said was an attractive to the organization because it will allow it to install tighter security measures.

It’s not yet clear whether the United Nations will have the same luck with its current search.  When the United Nations first announced its intention to find swing space for its offices a few years ago, many brokers predicted that the organization would have to pay exorbitant rents because it was seeking such a large lease with a short term, about six years.  Most landlords seek commitments of at least ten to twenty years when negotiating large deals and brokers said that most would make up the difference by gouging the organization with high rates.

One location that brokers say the United Nations will be looking closely at is 380 Madison Avenue, a building that has hundreds of thousands of vacant square feet and is close to its East Side headquarters, a neighborhood it wants to remain in because of the dense collection of UN-affiliated tenants in the area.

The building was rumored to be among the spaces the United Nations considered during its previous search.  Sheldon Solow owns a leasehold to the roughly 850,000 square foot property that expires in 2014, a timeframe that would suggest he may be willing to do the kind of short term deal that the United Nations is seeking.  Neither Van De Perre nor Schmidt would confirm specific locations that the United Nations was considering.

Van De Perre said that the new construction plan was introduced two weeks ago and could be approved in mid November.  The new plan represents a marked shift in the organization’s strategy for cost savings from the current plan, which segments the renovation into four phases so that personnel can be shuffled in the building to make way for the work rather than relocated offsite.  Instead of trying to minimize the United Nations’ exposure to the city’s leasing market by requiring less swing space, the new plan seeks to ameliorate the rising cost of construction.

According to United Nations’ estimates, inflation has driven the projected price tag for the renovation $219 million over the project’s $1.9 billion budget.  The Office of the Capital Master Plan said that relocating the building’s entire staff into swing space would allow the planned 6 year renovation for the Secretariat Building to be shortened to 3 years because more work could be done at once and would net $30 million in savings – although it’s not clear what rents that estimate assumes for the swing space.

The remaining $189 million would be shaved through value engineering Van De Perre said.  The United Nations hired the international construction firm, Skanska, over the summer to handle the renovation project.  Van De Perre said that the new construction plan came from cost saving suggestions Skanska provided the Office of the Capital Master Plan.

“Once you have a construction manager they’re able to provide you with a lot of options,” Van De Perre said.

The timeline for the Secretariat Building’s renovation wouldn’t be the only portion of the project that was shortened.  The planned renovation of the General Assembly building and the campus’s conference center would be shortened from 3 to 2 years.  A larger temporary conference facility would be constructed on the site’s north lawn to accommodate the relocation of more staff so that the building’s could accommodate more work at once.   The United Nations Secretary General Ban Ki-moon, may also move his offices into the temporary facility.

Scott Panzer, an executive vice president and principal at the real estate services firm, Newmark Knight Frank, is representing the United Nations in its space search.  Panzer didn’t return calls seeking comment.