The law firm Darby & Darby, which announced that it would wind down its operations in March, has given up the two floors it occupied high in 7 World Trade Center for its New York headquarters.
Darby & Darby was among the first tenants to commit to 7 World Trade Center, signing a deal for floors 41 and 42, roughly 80,000 square feet, during the summer of 2006, soon after the building was finished.
The 1.7 million square foot tower was developed by Larry Silverstein to replace the previous skyscraper that stood on the site, which was destroyed in the terrorist attacks of 9/11.
Though there was early uncertainty whether the speculative office tower would attract tenants, the deal with Darby & Darby and a host of other firms, including a pivotal 600,000 square foot lease with the ratings agency Moody’s, made 7 WTC a success.
The termination of Darby & Darby’s lease is an indication though that the skyscraper, widely considered Lower Manhattan’s highest quality office building, isn’t immune from the turmoil that has hit the city’s real estate market as a result of the economic downturn.
Previously ABN AMRO, which leased about 140,000 square feet in 7 WTC in 2006, put the entirety of that space, floors 30-33, on the market for sublease last year without ever having moved in.
It first appeared that the space could provide a lower cost option and weigh down rents on the remaining floors at 7 WTC being offered directly by Silverstein. But subleases for the entire ABN AMRO block were eventually arranged last year and Silverstein made headway in his efforts to market the remaining pocket of floors at the top of the building. In the fall of 2009, the German bank WestLB signed a leased for 7 WTC’s top three floors, 50-52 for rents reported to be in the $70s per square foot according to written reports.
In March, Darby & Darby announced that it would be shuttering its practice after 115 years of operation. The firm focused on intellectual property law and its dissolution took the industry by surprise according to written reports, which remarked that the firm’s end appeared to fit in with a trend of consolidation in the industry in which increasing shares of the market are controlled by mega-firms with a diverse array of practice groups rather than just one specialty.
The space will join the only remaining pocket of contiguous vacancy in the tower, floors 43-49, though unlike those other floors, which are in unbuilt condition, it is outfitted with an office installation. Darby & Darby built attractive facilities in the space according to a person familiar with the building. The build-out that will enhance Silverstein’s marketing efforts for the two floors because it means they are in move-in condition, saving both the tenant and the landlord the expense and hassle of having to fit out the space with offices.
The person said that Silverstein is asking the low $60s per square foot for the unbuilt vacant floors and high $60s for Darby & Darby’s floors because of they come with the installation. Because he has leased most of the tower, Silverstein has remained relatively firm on the rates he is seeking for the tower’s few open floors, which are the most expensive spaces on the market in Lower Manhattan during a period when rents in the district are falling.