The Real Deal New York

Cahill Gordon could soon ink Downtown’s biggest new deal so far this year

Law firm has a lease out for more than 200K sf at RXR Realty’s 32 Old Slip
By Rich Bockmann | April 25, 2018 01:00PM

Scott Rechler and 32 Old Slip

Scott Rechler and 32 Old Slip

Cahill Gordon & Reindel is in late-stage talks to relocate its offices in what could be Downtown’s largest new lease so far this year.

The law firm, currently located at Rudin Management’s 80 Pine Street, has a lease out just a few blocks away for 215,000 square feet at RXR Realty’s 32 Old Slip, sources told The Real Deal.

Scott Rechler’s RXR completed a capital improvements program to the 32-story, 1.1 million-square-foot building after purchasing it in 2015 for $675 million. The asking rent in the deal is $69 per square foot.

A spokesperson for RXR declined to comment, and a representative for Cahill Gordon could not be immediately reached.

Cahill’s broker, Moshe Sukenik at Newmark Knight Frank, could not be reached.

The international law firm is consistently one of the most profitable in New York. It ranked No. 16 on the American Lawyer’s 2017 list of top-performing legal shops with gross revenues of $387.65 million, up 1.3 percent from a year earlier. The firm earlier this year was touring several properties in Lower Manhattan, with a preference toward buildings near its current headquarters including 32 Old Slip and Jack Resnick & Sons’ 199 Water Street, Crain’s reported.

The law firm’s deal is on track to be the largest new lease so far this year in Lower Manhattan, which has seen leasing volume slow compared to an especially active start to 2017.

Earlier this year, the Big Four advertising conglomerate Omnicom Group tied up a deal to extend and re-stack 288,000 square feet at L&L Holding Company’s 195 Broadway. But so far this year, there hasn’t been a new lease in Lower Manhattan larger than 50,000 square feet.

J. Crew is also considering what could be a top deal for Lower Manhattan this year. The retailer is reportedly considering subleasing Bank of New York Mellon’s 300,000 square feet at 225 Liberty Street at Brookfield Place, though it wasn’t clear how far along the talks were.

The Downtown market recorded 794,000 square feet worth of deals during the first quarter, a significant drop off of 58 percent from the same time last year, according to CBRE. The first three months of 2017 saw nine deals close at 100,000 square feet or more, among them the music-streaming app Spotifty’s 378,000-square-foot lease at Silverstein Properties’ 4 World Trade Center.

And in addition to a drop-off in demand, another indication that the winds Downtown are shifting in favor of tenants is the fact that more and more space is becoming available. Available space in Lower Manhattan is near the peak level seen in 2012, and could increase as more new construction and sublet space is expected to come online, according to CBRE.

In 2015, RXR bought the property at 32 Old Slip, which had been damaged three years before in Superstorm Sandy. At the closing, Rechler’s firm sold the land underneath the building to a partnership led by David Werner in a 150-year leaseback deal.