The Real Deal New York

Elementary, my dear Watson: IBM searching for massive new NYC office

Tech company on the search for as much as 350K sf
By Rich Bockmann | February 22, 2017 12:30PM

51 Astor Place, IBM’s Ginni Rometty and 590 Madison (Credit: 51 Astor, Wikipedia and 590 Madison)

IBM supercomputer Watson is helping people file their taxes, upgrading the city’s 311 system and helping to turn Internet of Things devices into points of sale. But all that high tech still needs some brick-and-mortar office space.

IBM, which is headquartered about 35 miles north of Manhattan in Armonk, NY, and has offices in the city on Madison Avenue and in the East Village, is looking for as much as 350,000 square feet of additional space in the city as it expands Watson, sources told The Real Deal.

Representatives for IBM couldn’t be reached for comment.

The technology company recently announced partnerships with a number of commercial clients such as H&R Block and Visa as it expands with Watson, the artificial intelligence platform that won at Jeopardy! back in 2011.

IBM has had offices in the city going back to the early half of the 20th Century, when it set up shop at 590 Madison Avenue. In the late 1970s it tore down the old building at that site and built a 43-story, 1 million-square-foot modern corporate headquarters known as the IBM Building. But the company sold the property to a partnership between Edward J. Minskoff TRData LogoTINY and the investment group Odyssey Partners in 1994, a time when IBM’s fortunes were in decline and it was shedding space in the city.

But along came Watson, and IBM began growing its footprint. In 2014, it inked a deal with Minskoff to sign on as the 120,000-square-foot anchor tenant at his 51 Astor Place property, which is known as the IBM Watson Building. The tech firm took another 25,000 square feet in the building in 2015, bringing its total footprint there to just shy of 144,000 square feet.

Sources said IBM’s now looking for somewhere between 250,000 and 350,000 square feet, an assignment that will surely limit its options. Blocks of that size are nearly nonexistent in Midtown South. Last month, the music-streaming app Spotify, which is currently based in Chelsea, signed a lease for 378,000 square feet at Silverstein Properties’ 4 World Trade Center.

IBM CEO Ginni Rometty is a member of President Trump’s CEO advisory board, and has said that Trump’s plan to reform the corporate tax structure and scale back regulations will improve the country’s business climate.

CBRE’s Carl Eriksen, who is based out of the brokerage’s Saddle Brook, N.J., office, is handling the search along with James Ackerson in Manhattan. Eriksen did not return calls for comment.