In interview, Prudential Real Estate chief reflects on 11 Times Square investment

August 29, 2012 09:30AM

The lead investor in SJP Properties’ $1.2 billion 11 Times Square admitted it overestimated the long-term strength of the market when it backed the struggling office tower (note: clarification appended). In an interview with the New York Times, Prudential Real Estate Investors CEO J. Allen Smith said there was no way he expected the property to be just 40 percent leased three years after opening. “If we had known it would go on this long, we probably wouldn’t have done it,” he said.

Smith attributed the property’s struggle to an office leasing market that is dominated by renewals. He appeared to take comfort from the fact that the building wasn’t regularly losing out to other big blocks of spaces because of faulty pricing. He also indicated that because of the support of his firm, which invests some $50 billion in real estate, the debt level is “manageable” and under 50 percent on the property.

The 1.1 million-square-foot office tower officially opened for leasing in November 2008 and signed law firm Proskauer Rose to 406,000 square feet in May 2010. It also added Zukerman Gore Brandeis & Crossman to 17,144 square feet one year later. Things have looked up for the building of late as it signed a tenant for half of its 55,000-square-foot retail space this past May and is said to be in talks with Microsoft for an office lease. [NYT]Adam Fusfeld