Vornado has plans to clear out more space for Facebook in Midtown South: sources

Several major retailers could be on their way out to make room for tech giant

TRD New York /
Jan.January 04, 2018 02:30 PM

From left: 770 Broadway, Steve Roth and Mark Zuckerberg

Facebook and Vornado Realty Trust are discussing major expansion plans in Midtown South.

Vornado is in talks to buy out other tenants at 770 Broadway, which would allow Facebook to expand its footprint at the 1 million-square-foot landmarked office building, sources told The Real Deal.

J. Crew, which occupies about 300,000 square feet in the behemoth of a building overlooking Astor Place, hired JLL to find it a new corporate headquarters. If the fashion company finds what it’s looking for, Vornado is ready to buy up the remaining term on its lease and then rent that space to Facebook, sources said.

The home of the former Wanamaker’s department store is so much a part of J. Crew’s identity that the company has a line of jeans tagged “770.” But J. Crew is struggling to overcome the same litany of challenges faced by its competitors in the choppy retail space, and in November announced plans to close 39 locations, including its 21-year-old flagship store at 99 Prince Street in Soho.

Vornado, meanwhile, recently paid roughly $46 million to Kmart – whose department store occupies about 30,000 square feet on the ground, mezzanine and lower-level of the building – in what appears to be a buyout of the retailer’s lease, according to city property records. Observers said it’s unlikely that Vornado boss Steve Roth would take such a risk without a replacement tenant lined up, and speculated that Facebook could be looking to make a splash with a high-profile storefront, a la Microsoft’s store on Fifth Avenue.

A representative for Vornado declined to comment, and a spokesperson for Facebook could not be immediately reached.

Mark Zuckerberg’s company, which has a market cap of $537 billion, moved into Frank Gehry-designed offices at 770 Broadway in 2013 and has since expanded to about 355,000 square feet. It’s the largest tenant in the building, where neighbors include original Internet king AOL.

But the Menlo Park-based tech giant, which competes with firms like Google for talent, has a voracious appetite for space in the city, and in 2016 it inked a deal to take about 200,000 square feet at Orda Management’s 225 Park Avenue South.

That same year, Vornado bought J. Crew out of one floor on the building, which Facebook expanded into. The building at 770 Broadway is unique in Midtown South in that it’s one of the few properties that can offer the kinds of large, open floors that are in high-demand with tenants, with floor plates of about 80,000 square feet. Because of that, it’s also one of the priciest buildings in the submarket, with asking rents north of $100 per square foot.

In May 2016, Vornado refinanced the cast-iron building with a $700 million mortgage from Morgan Stanley. It bought the building in 1998 — when AOL reigned supreme — for a mere $149 million.


Related Articles

arrow_forward_ios
Vornado's Steve Roth and 220 Central Park South (Credit: Getty Images, iStock)

Free and clear: Vornado pays off debt at 220 CPS

Free and clear: Vornado pays off debt at 220 CPS
Vornado chairman and CEO Steven Roth, and 608 Fifth Avenue (Credit: Getty Images)

“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call

“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call
Facebook CEO Mark Zuckerberg and Hudson Yards (Credit: Getty Images and Wikipedia)

Facebook close to finalizing Hudson Yards office deal: report

Facebook close to finalizing Hudson Yards office deal: report
Clipper Equity's David Bistricer (REIT)

David Bistricer’s Clipper Realty reports record Q2 profit

David Bistricer’s Clipper Realty reports record Q2 profit
Vornado CEO Steven Roth and a rendering of the Farley Post Office building (Getty, iStock, SOM)

Vornado will install facial recognition tech in all its buildings

Vornado will install facial recognition tech in all its buildings
Cushman & Wakefield’s Brett White

Cushman & Wakefield reports $101M quarterly loss

Cushman & Wakefield reports $101M quarterly loss
Durst Organization chairman Douglas Durst and Advance Publications president Donald Newhouse with One World Trade Center (Newhouse by Ilya S. Savenok/Getty Images for The Association for Frontotemporal Degeneration; Unsplash)

Condé Nast may be moving out of 1 WTC

Condé Nast may be moving out of 1 WTC
Moody's CEO Raymond McDaniel and 1 World Trade Center (McDaniel by Alex Wong/Getty Images; Pixabay)

Moody’s looks to sublease its 1 WTC office

Moody’s looks to sublease its 1 WTC office
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...