Real Estate Weekly reported in its print edition yesterday that two city tenants were considering a major lease in Long Island City at Gotham Center, a large commercial complex that Tishman Speyer is planning to build on the current site of a municipal garage along Jackson Avenue.
Today, a high-level broker who handles leasing for large city tenants told rew-online.com that the Department of Health is close to a deal for as much as 400,000 square feet of space in the new development. As REW had reported, the Department of Citywide Administrative Services signed a letter of intent with Tishman Speyer during the summer, pledging to take at least 300,000 square feet.
DCAS handles leasing for city agencies and there were rumors in the market that the agency was reserving the space for either the Department of Health or the Department of Sanitation. The city often handles its own office deals and its commissioner for leasing
Jeff Kondrat wouldn’t return calls seeking comment or confirmation of the deal.
Brokers say that the lease is the city’s way of encouraging commercial development in Long Island City, which it has long said it wants to transform – because of its proximity to Manhattan – into the city’s fourth office district behind midtown, downtown and downtown Brooklyn. It’s unclear if Gotham Center will kick-start more commercial projects but its developers are said to have halved the size of the project’s office component from 3.5 million square feet to around 1.7 million square feet due to difficulty in securing enough interest from tenants.
Over 300,000 square feet remains available at 2701 Queens Plaza North, where MetLife is subleasing a major portion of its offices in the building after it decided to relocate back to Manhattan, to 1095 Avenue of the Americas. Edward J. Minskoff Equities, a real estate investment and development firm, owns an antiquated industrial building at 30-30 Northern Boulevard that for years it had planned to redevelop into a new office building but now is seriously considering converting instead into a ground up college dormitory project. In an interview with rew-online.com, Edward Minskoff, the owner and founder of the firm, said that he hasn’t decided however whether he will scrap commercial plans and said that there are a number of large tenants shopping for space in the district.
Tishman Speyer partnered with the Modell’s family, owner of the sporting goods retail chain Modell’s, in its plan to build Gotham Center. The Modell’s participation came about, sources say, because the family owns a number of the commercial leases in the base of municipal garage as well as a string of properties across the street from the garage on the eastern side of Jackson Avenue. Is was on the those parcels on the east side of Jackson Avenue where roughly half of Gotham Center’s commercial space was slated to be built. But sources say that the Modell family has filed for residential development instead because of the trouble in securing commitments from commercial tenants.
It’s not clear just how much development the lease with the Department of Health will anchor but it’s likely that Tishman Speyer will construct a building larger than what the Department of Health needs. Developers typically seek leases before building because having tenant commitments provides cash flow that makes a new development less of a financial risk.
Tishman Speyer wouldn’t comment on the deal or what its development plans are.