32BJ SEIU, a union that represents building workers, has completed a deal to relocate to 620 Avenue of the Americas.
Brokers involved in the lease said that the new location was attractive to 32BJ because of its massive floors, which are about 109,000 square feet apiece, and because the building could be configured in a way that would give it the feel of a private facility with custom amenities.
Mitchell Konsker, an executive at the real estate services firm Cushman & Wakefield who represented the owners of 620 Avenue of the Americas, said for instance that a freight entrance would be converted into a private lobby for 32BJ and that the union would also construct a 475-seat auditorium in its space.
“This location was attractive because it offered the tenant a building within a building concept,” Konsker said.
Mark Weiss, an executive at Newmark Knight Frank who repped 32BJ, said that the building’s larger floors would allow the organization to operate more efficiently. The union, which represents building services employees such as security guards, doormen, maintenance men, window cleaners and food service personnel, will fill 620 Avenue of the Americas’ entire 4 and 5 floors and a portion of 6 and 7, roughly 283,000 square feet. At its current location, 101 Avenue of the Americas, the union is listed as occupying 23 floors according to the real estate database website MrOfficeSpace.com.
Real Estate Weekly first reported that 32BJ was in discussions to take space at 620 Avenue of the Americas in February. The deal appeared to be a major coup for the squat, 7-story tower, which sits on the edge of Chelsea and is probably best known to passersby for its large retail space, home to the stores Bed Bath & Beyond and T.J. Maxx.
A partnership between the real estate investors Joe Chetrit, Charles Dayan and Yair Levy purchased the roughly 600,000 square foot building in 2006 at the height of the real estate market. The group nearly lost control of the tower during the depths of the economic downturn. The Gap, which had its New York corporate headquarters in the tower, decided last year to relocate to Lower Manhattan and will vacate later this year. Filene’s Basement, which occupied 620’s large basement retail level, terminated its lease when the chain went bankrupt last year.
SL Green, a real estate investment trust that holds loans against 620, moved to foreclose on the property earlier this year but instead reached a deal with the owners to restructure the debt and allow the partnership to continue to operate the building. The agreement with SL Green, whose takeover of 620 at one point appeared imminent, seemed to coincide with the talks with the union, meaning the lease might have been a critical reprieve for the partnership. Chetrit, Dayan and Levy are also said to be arranging a deal to bring the department store chain Marshalls into the retail space that was formerly occupied by Filene’s.
Tenants have tended to steer clear of buildings embroiled in distress according to real estate experts, but those involved in the deal at 620 said that 32BJ was provided assurances that allowed it to proceed. Konsker said that 32BJ was granted non-disturb clauses in its lease, provisions that protect the tenant’s occupancy in the case that there is a transfer of ownership. Although he wouldn’t go into details about how the deal was structured, Konsker said that SL Green had some participation in the leasing talks.
Mark Weiss said that he and Konsker worked closely together to arrange the deal. He also wouldn’t go into specifics about the transaction, but did say that the union became comfortable with the deal because all the parties involved with the building appeared to be working cooperatively and were eager to get the lease done.
According to sources who spoke with REW after SL Green and the ownership venture settled the foreclosure proceeding earlier this year, Chetrit and Dayan were said to have agreed to pump in $10 million of cash in order to pay for the brokerage fees and concessions needed to lease 620’s vacancies. In exchange, SL Green agreed to commensurately write down a mezzanine loan it holds against the property, easing its heavy debt burden.