The medical insurance company Healthfirst Inc. is negotiating to take a large lease at 100 Church Street sources say.
Neither a spokeswoman from Healthfirst nor executives from SL Green, the real estate investment trust that owns 100 Church, returned calls for comment on the rumored deal by press time. But sources with knowledge of the lease said that it was for about 120,000 square feet near the top of the 21-story tower.
The real estate database MrOfficeSpace.com lists floors 17, 18 and 19 as available in the building, each about 43,000 square feet in size.
A broker familiar with the deal and the rents that 100 Church’s brokers have been seeking for the building’s substantial vacancies said that Healthfirst could likely arrange a lease for around $30 per square foot after factoring in the contributions it will receive from the landlord to outfit its space with a new office installation.
The deal, if it gets done, would be the biggest since SL Green took control of the building at the beginning of the year and another sign of progress for the property, which had appeared to founder under its previous owner the Sapir Organization.
In May, Crain’s reported that The Farber Center for Radiation Oncology had signed a 20-year lease for a roughly 22,000 square foot space on the building’s ground, basement and mezzanine levels that the center will use as a cancer treatment facility for outpatients. The article reported that the center agreed to rents of about $75 per square foot, higher than what the building can get for its office floors because retail space is generally more valuable per square foot.
The two deals appear to demonstrate the strength of the healthcare sector, which added jobs according to job reports released by federal government even as the economy was being ravaged by the recession and the labor market was hemorrhaging layoffs.
Though a deal with Healthfirst would appear to be a strong signal for 100 Church Street, its significance to lower Manhattan is less clear. Some brokers see any sign of deal activity downtown as a positive sign given the widespread predictions that the market there is in the process of significantly weakening and that large vacancies will continue to crop up.
Another notable potential deal in the area in recent weeks is a roughly 100,000 square foot lease being considered by the Daily News at Four New York Plaza. Unlike the Daily News however, which would be relocating from 450 West 33rd Street, Healthfirst is moving from locations already within lower Manhattan, neutralizing its cumulative impact on the downtown market because it is filling vacancy only by creating commensurate openings elsewhere in the area.
The insurance company currently splits its offices between 123 William Street and 25 Broadway. A driver for Healthfirst in the deal at 100 Church Street is the opportunity to consolidate facilities in one location the sources said.
100 Church still has substantial openings available. According to MrOfficeSpace.com, floors 8, 9, 10, 12, 14,15 and 16, a total of almost 400,000 square feet, are vacant.
SL Green had been a mezzanine debt holder on the ownership interest in the property, which was held by the Sapir Organization. In January this year, the company used its position to take control of the property after the Sapir Organization failed to meet certain income thresholds required by the loan.
Real estate experts predicted the change in ownership would do much to reverse the building’s issues. SL Green is the city’s largest commercial landlord and is considered one its most sophisticated and successful.
Recently the firm purchased 660 Lexington Avenue and 125 Park Avenue, two midtown office properties that have been among a very short list of large real estate transactions this year. Apparently hungry for real estate amid the downturn because of the sense that prices have bottomed and that public companies now have a profound buying advantage over competing bidders due to their access to capital, SL Green, as was the case with 100 Church, has also looked to its portfolio of loans to try to seize properties at a time when few have come for sale through normal channels such as auctions.
The company moved to take over 620 Avenue of the Americas, a building it held debt against, earlier this year before coming to a deal with the borrowers. SL Green even had made motions to foreclose on 450 West 33rd Street, the Daily News’s current home against which it also holds debt, before it worked out a deal there too with that tower’s owner, Broadway Partners.
A team from the real estate brokerage firm Newmark Knight Frank led by company executives James Kuhn, Brian Waterman, Lance Korman and Hal Stein, represent SL Green at 100 Church. None were available for comment on the deal. Steve Durels, an SL Green executive who oversees the company’s Manhattan leasing also wasn’t available for comment. Jones Lang LaSalle represents Healthfirst. A call to JLL’s New York area president Peter Riguardi was not returned by press time.