The Real Deal New York

Aetna consolidating NYC offices in Soho

Insurer signed on for 100K sf at One Soho Square after backing out of megadeal in Meatpacking
By Rich Bockmann | August 09, 2018 12:15PM

161 Sixth Avenue and Aetna CEO Mark Bertolini (Credit: One Soho Square and Getty Images)

UPDATED, Aug. 9, 3:05 p.m.: Aetna, which earlier this year pulled an about-face on plans to move employees from Connecticut to the Meatpacking District, will be consolidating some of its existing New York City offices in Soho.

The insurance company signed a lease for a little more than 100,000 square feet at Stellar Management’s One Soho Square, sources told The Real Deal.

Aetna signed a lease for the top four floors at 161 Sixth Avenue, the eastern portion of Stellar’s redevelopment project, according to sources. The company will be relocating and consolidating space it leases in Midtown at SL Green Realty‘s 100 Park Avenue and Empire State Realty Trust‘s 1333 Broadway.

“We are combining multiple existing locations into one updated space in New York City, and as a result have signed a lease at One Soho Square,” an Aetna spokesperson told TRD. “This will not impact employee headcount in the area; in fact, we expect job growth in the businesses that will be located in the new space, which we expect to occupy in the first quarter of 2019.”

Representatives for Stellar did not immediately respond to a request for comment.

Aetna last year signed a lease for the full 145,000-square-foot office portion of Aurora Capital Associates and Vornado Realty Trust’s new Meatpacking District office building at 61 Ninth Avenue. The plan was to consolidate the insurer’s existing Manhattan offices and move its corporate headquarters from Hartford, Conn.

But when CVS struck a deal to buy Aetna for $69 million, it pulled the plug in January on plans to move into the Rafael Viñoly-designed building.

Aetna hired Newmark Knight Frank to market the space for sublease, and CVS spokesperson David Palombi told the Wall Street Journal that the company has “no plans to relocate Aetna’s operations from Hartford.”

Sources said the Soho space will be used to relocate existing New York employees, and that no workers from Hartford will be relocated.

And Aetna will realize some cost savings with the Soho space.

A source familiar with the deal said the company’s rent on the 12th through 14th floors at One Soho Square starts at $84 per square foot, and begins at $112 per square foot on the 15th floor.

The company is paying rent of $130 per square foot in the Meatpacking District, where it’s still responsible for the lease.

Another component of that deal that remains unclear is the status of the economic incentives that the city and state offered Aetna to relocate about 250 jobs to the city from Hartford.

Gov. Andrew Cuomo’s Empire State Development Corp. offered the company $24 million in performance-based tax credits over 10 years. And the New York City Economic Development Corp. promised Aetna a $9.6 million incentive package.

The EDC reportedly cancelled that economic assistance when CVS announced Aetna would not move into 61 Ninth Avenue.

Representatives for ESD and EDC were not immediately available to comment.

Update: This story has been updated to include a comment from Aetna.