The Real Deal New York

Sutton and SL Green ink creative lease to expand retail options at 1552 Bway

August 31, 2011 06:54PM
By Adam Pincus

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From left: Wharton Properties President Jeff Sutton; Marc Holliday, CEO of SL Green; Jeffrey Gural, chairman of commercial brokerage Newmark Knight Frank; 1552 Broadway and 1560 Broadway

SL Green Realty and joint venture partner Jeff Sutton have found a way to possibly triple the
retail space at the 15,000-square-foot 1552 Broadway in Times Square without
making the building any bigger.

Because constructing new floors at the landmarked commercial building is
severely regulated, they are going horizontal into neighboring 1560 Broadway,
a 17-story office building controlled by Newmark & Co. Real Estate, a property
landlord that is an affiliate of the commercial brokerage Newmark Knight
Frank.

SL Green and Sutton, president of Wharton Properties, closed on the
$136.55 million purchase of the four-story 1552 Broadway Aug. 19

The I. Miller Building at 1552 Broadway, at the northeast corner of Broadway
and 46th Street, has sculptures of four famous actors, Ethel Barrymore, Marilyn
Miller, Rosa Ponselle and Mary Pickford that are part of the façade above the
second floor. PropertyShark.com shows the building has additional air rights, but
because it is regulated by the Landmarks Preservation Commission, design and
construction is more complicated. (It is not known whether SL Green and Sutton
would also develop the structure higher.) Sutton did not immediately return a call
for comment. SL Green declined to comment.

The memorandum of lease filed with the city shows SL Green and Sutton
leased the entire second floor, a portion of the ground floor, and portion of the
basement, at 1560 Broadway. The financial terms were not revealed. In
addition, the lease provides for some valuable options to further expand the retail
by as much as another 20,000 square feet. They include expansion rights for the
entire third floor and first rights to lease ground-floor space currently occupied
by fast food chain McDonald’s and another tenant, the Times Square District
Management Association.

The lease also provides for further unifying the properties. SL Green and
Sutton have, “the right to construct certain openings between the walls of the
1560 building and the 1552 building,” the memorandum of the lease says.

In addition, the lease provides rights to lease yet-to-be-constructed LED signage
on the 1560 Broadway building. The renewal rights extend 70 years, and the
lease includes first rights to buy the building or Newmark’s lease, should either
become available.

While Newmark is considered the landlord for 1560 Broadway, in fact it is a net
lease tenant, with a long-term lease with the actual owner of the property, Actors
Equity Holding, an affiliate of the union Actors Equity Association.

Brokers Alan Steinberg and Brian Steinwurtzel of Newmark Knight Frank, are the
leasing agents for the building, but did not respond to a request for comment. A
spokesperson for Newmark said no one was available to comment.

The asking rent for the fourth floor is $35 per square foot, and the average floor
size is about 15,000 square feet, CoStar shows.

The city also published today three loans covering both 1552 and 1560
Broadway from Deutsche Bank to SL Green for a $94 million acquisition loan, an
$18.5 million building loan and a $12.1 million project loan, city records show.

A related filing published today shows a lease covering the whole of 1552
Broadway, which is now occupied by a T.G.I. Friday’s restaurant, was
terminated. However, the restaurant has the right to remain there until Aug. 23,
2012, the filing says.

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