Guardian Life negotiating sublease from Coach at 10 Hudson Yards

Insurer considering taking 100K sf as it mulls selling Lower Manhattan HQ

Aug.August 02, 2017 06:01 PM

Guardian Life Insurance CEO Deanna Mulligan and Coach CEO Victor Luis with 10 Hudson Yards

Guardian Life Insurance is in talks to sublease a large chunk of space from Coach at Hudson Yards as the mutual insurance company considers selling its headquarters in Lower Manhattan, sources told The Real Deal.

The 157-year-old insurance firm, which had $66.5 billion in assets under management at the end of the year, is negotiating to sublease about 100,000 square feet of the extra space Coach warehouses at 10 Hudson Yards.

A spokesperson for Guardian told TRD that the company is “evaluating opportunities in Manhattan as part of our workplace strategy. No decision has been made as we are still in the planning and evaluation stages.”

Representatives for Coach were not immediately available for comment. The average rent over the term of the deal will be above $100 per square foot, a source familiar with the negotiations told TRD.

Coach paid $530 million in 2013 to purchase its 740,000-square-foot commercial condo and then ponied up another $220 million to build out its space at the Hudson Yards tower developed by the Related Companies and Oxford Properties Group. The building opened last year with much fanfare, and in August, Coach finalized a $707 million sale-leaseback agreement with Allianz Real Estate, inking a 20-year lease on the space at terms that were described as below market rent.

It’s not clear how much of the space Coach actually occupies, but like many companies it took extra warehouse space that’s often used to accommodate growth. Of course, it can also be leased out to other tenants – a prospect that might look especially attractive in an area like Hudson Yards where tenants who got in on the ground floor can turn quite a profit leasing space at market rates.

Aside from the various facets involved in the space, Guardian’s plans to move to Hudson Yards are unique in that while tenants often migrate from areas like Midtown and Midtown South to Lower Manhattan, few make the reverse trek from Downtown northward.

The law firm Milbank, Tweed, Hadley & McCloy was one of the few exceptions to the rule when it inked a deal to relocate from 28 Liberty to 55 Hudson Yards, which is currently under construction.

Guardian is headquartered at the 846,000-square-foot 7 Hanover Square in the Financial District, where it signed a 20-year lease in 1998 with owners the Milstein family, Swig Company and Weiler Arnow Investment.

At some point before March 31 this year, Guardian exercised an option that gave it the right to purchase the property for $147 million from owners the Milstein family, Real Estate Alert reported. The insurer hasn’t completed the sale, though, and is reportedly considering flipping the property, which could garner offers of up to $423 million.

Guardian’s lease covers nearly the entire building, and as of 2011, it sublet about 270,000 square feet to other tenants, according to a loan servicer report. Its lease expires in September 2019.

Hiten Samtani and Mark Maurer contributed reporting. 

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