The Real Deal New York

German lender takes 7 World Trade Center space HSBC abandoned

November 19, 2008 05:33PM
By David Jones

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Less than two months after HSBC backed out of a massive lease agreement at 7 World Trade Center, Silverstein Properties has reached a tentative agreement on a new lease with German lender WestLB, sources familiar with the discussions said.

WestLB, a leading German financial institution, has agreed to relocate to the Lower Manhattan building with a 129,000-square-foot lease on the 50th to 52nd floors. Asking rents at the 1.7 million-square-foot tower range from $75 to $85 a square foot for the top two floors.

Brokers said the deal would prove to be a tremendous boost to 7 World Trade Center and Lower Manhattan, which is beginning to see some major fallout from the global financial meltdown.

A report by the Downtown Alliance, citing data from Cushman & Wakefield, shows that the Lower Manhattan vacancy rate for Class A space is 6.9 percent, a 28 percent increase from a year ago. The report shows that 29 percent of the total available space in Lower Manhattan is sublease space, more than twice the 14 percent rate at the end of 2007.

The sources shot down an online report from Real Estate Weekly that WestLB was getting cold feet about the 7 World Trade Center deal. The article said that WestLB was looking at other Midtown options, including 1290 Sixth Avenue, 1633 Broadway and 114 West 47th Street. WestLB officials were not immediately available for comment.

Despite market conditions, Eric Schmall, a senior managing director at Studley, said the pending WestLB deal “shows the resilience of Downtown. Of 7 World Trade Center, he noted, “It’s one of the best buildings in Lower Manhattan.”

In late September, HSBC reneged on the deal to lease 300,000 square feet at 7 World Trade Center. The London-based bank had planned to move its North American headquarters to the Lower Manhattan tower, but the bank quietly backed out of the lease when bids for its 452 Fifth Avenue headquarters came in well below the $600 million asking price. HSBC said it regularly reviews its real estate holdings, including 452 Fifth Avenue, but declined further comment.

Since opening the building in May 2006, Silverstein has amassed a roster of high-profile tenants at 7 World Trade Center, including Moody’s, Ameriprise Financial, and the New York Academy of Sciences.

Silverstein is still looking to lease the 43rd through 49th floors, where spaces range from 41,759 to 42,442 square feet. The developer has leases pending on a 43,000-square-foot space on the 37th floor, and 7,800 square feet on the 33rd floor, where asking prices are $75 a square foot. 

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