Facebook’s huge lease at the Farley Post Office redevelopment in Midtown came with a pretty nice perk: The tech giant got a 9 percent discount when it signed the 730,000-square-foot lease last month.
Facebook agreed to pay $109 per square foot in rent, with that rate increasing by $10 per square foot every five years over a 15-year period, according to Business Insider.
That, plus other concessions, means the company is saving about $100 million — or 9 percent — on its original deal with landlord Vornado Realty Trust.
The rent Facebook negotiated is $4 per square foot cheaper than what was originally negotiated before the pandemic, according to an anonymous source quoted by Business Insider. Vornado also agreed to pay Facebook $146 million toward the build-out cost, or $36 million more than its initial $110 million contribution.
In total, Facebook will pay a little more than $1 billion over the course of its lease; the initial deal was valued at $1.13 billion.
The Facebook deal and the various concessions Vornado was willing to give could be representative of what to expect in the office leasing market in the coming months. Office vacancies are rising, and tenants are reluctant to make long-term commitments as they face uncertainty in the era of pandemic. Landlords have been forced to give discounts and other incentives to convince companies to sign leases, experts said.
“Otherwise, they could be sitting with a vacant space for years,” said David Falk, the New York area president of the real estate services firm and brokerage Newmark Knight Frank. [BI] — Akiko Matsuda