The Real Deal New York

SL Green agreed to pay off old lease to lure firm to One Vanderbilt

Outstanding rent could exceed $100M
August 13, 2018 06:00PM

A rendering of One Vanderbilt (Credit: Kohn Pedersen Fox)

When the Carlyle Group agreed to move to One Vanderbilt, SL Green Realty sweetened the deal by offering to pay off the company’s old lease — a sum that could exceed $100 million.

SL Green agreed to take over the global asset manager’s office lease at 520 Madison Avenue, which is set to expire in 2031, Crain’s reported. The Carlyle Group plans to move into One Vanderbilt in 2020.

The existing lease could be worth more than $100 million, according to the publication, but the real estate investment trust isn’t likely going to have to pay the full rent. The REIT may instead cut a deal with Tishman Speyer, the owner of 520 Madison, to terminate the lease early.

The Carlyle Group inked a 15-year lease for 94,000 square feet on floors 36 to 38 of SL Green’s tower, the company announced last month. The company currently occupies 120,000 square feet at Tishman Speyer’s Madison Avenue property.

The firm’s deal with SL Green is yet another sign of how far landlords will go to lure tenants to their commercial properties. On average, Midtown tenants receive nearly $100 per square foot from landlords to make improvements when signing a lease along with 14 months of free rent, according to Cushman & Wakefield[Crain’s]Kathryn Brenzel