By Daniel Geiger
The investment banking firm SRS Capital Partners has signed a sublease for about 11,000 s/f at the brand new high-end midtown tower One Bryant Park.
The company, which will be relocating from the top floor of 461 Fifth Avenue, will take the space from Marathon Asset Management, a financial firm that leased two floors in One Bryant Park at the height of the real estate market in 2007 and then moved to shed half of that space in subsequent months.
The deal with SRS absorbs the last of what Marathon has aimed to dispose of. SRS will take a portion of the 39th floor, a roughly 35,000s/f space in total that Marathon has divided between three tenants.
In the summer of 2008, Marathon completed its first deal for the space, a roughly 10,000 s/f sublease with the Korean financial company, Mirae Asset, for rents around $150 per square foot, according to sources.
The timing of the deal was fortuitous for Marathon because its exorbitant rates would likely have been impossible to achieve just months later when the leasing market dipped as crisis bubbled over in the financial sector and the economy slipped into a deep recession.
Marathon appeared to market the remainder of the space for months with few takers until a deal was finally arranged with another boutique investment company, Apex Capital Management, to take another of the three units.
Marathon, a financial firm that is involved in a number of different investment businesses including hedge funds, alternative investments, structured finance and real estate, signed a 76,000 square foot lease for One Bryant Park’s entire 38th and 39th floors in the summer of 2007 for rents at about $115 per square foot.
People familiar with Marathon’s real estate decision making say that the company took more space than it initially planned to occupy in that deal because it wanted to provide itself room for future growth, subleasing the extra space in the meantime. What isn’t as clear is if the company always expected to sublease one of its floor in its entirety or if its projections of growth were dented by the tumult in the economy.
Rents weren’t immediately available for the deal with SRS Capital, but they are far less than what Marathon was able to get in the lease with Mirae, or even what the firm itself is spending for the space. Marathon also spent significant capital to outfit the two floors with an expensive custom office installation.
One Bryant Park opened last year and is one of the city’s most prestigious office towers. Virtually the entire 55-story building is full, most of it by Bank of America. Still, even though the tower is home to some of the most successful tenants, it has seen signs of the real estate downturn.
Dallas-based hedge fund HBK Investments, for instance, gave back about a third of the building’s 40th floor to the landlord, the Durst Organization in 2008.
Ben Friedland an executive from the real estate services firm CB Richard Ellis who specializes in the city’s high end leasing market, represented SRS Capital in its deal. Friedland was also part of the CBRE team, led by its New York CEO Mary Ann Tighe, that represented Marathon in its original lease at the tower. Alex Chudnoff, an executive at Cushman & Wakefield, marketed the sublease space for Marathon and represented the firm in the deal with SRS.