Here’s what tenants are paying at the IBM building

Tech company still occupies most space at Midtown tower; law firm Crowell & Moring pays more in base rent

New York /
Oct.October 08, 2020 07:30 AM
590 Madison Avenue and IBM CEO Arvind Krishna (Google Maps; Getty Images)

590 Madison Avenue and IBM CEO Arvind Krishna (Google Maps; Getty Images)

Undeterred by the pandemic, IBM continues its search for up to 500,000 square feet in which to consolidate its existing Manhattan offices, with recent reports indicating the technology giant has narrowed the selection to half a dozen buildings.

Three decades ago, IBM had an entire 1 million-square-foot Midtown office tower to itself, on the same block as Trump Tower. The IBM building at 590 Madison Avenue served as the company’s eastern regional headquarters until 1994, when it was sold to the current owners, the Board of the State Teachers Retirement System of Ohio.

IBM’s footprint at the property has shrunk significantly since then, and STRS Ohio has mulled a sale of the building on a few occasions.

According to the rent roll from March, the 42-story building was 81-percent leased, up four percentage points from the year prior.

IBM remains the largest tenant by square footage with 121,000 square feet on the 3rd, 12th, 14th, 16th and 17th floors. The law firm Crowell & Moring accounts for a larger share of total base rent, paying a much higher $135 per square foot for its 100,000 square feet on floors 18 through 20, and on the 22nd floor.

The property was most recently refinanced with a $650 million mortgage provided by Goldman Sachs in 2015, the bulk of which was securitized in the single-asset CMBS deal known as GSMS 2015-590M.

Documents associated with the securitization, as well as the latest surveillance update from Kroll Bond Rating Agency, provide an inside look at the IBM Building’s finances.

Colony Capital, Delphi Capital Management and flexible office provider Regus are also paying triple-digit rents for their space, while IBM, Aspen Insurance and Morgan Stanley pay rent in the high $80s.

Tenants in the building’s roughly 42,000 square feet of retail space include luxury watch retailer Tourneau and British auction house Bonhams.

Diagram illustrating STRS Ohio’s ground lease with the Trump Org. Source: Loan prospectus via Trepp

Diagram illustrating STRS Ohio’s ground lease with the Trump Org. Source: Loan prospectus via Trepp

To the southwest of the IBM building, an open space on the ground level connects to the atrium of Trump Tower. STRS Ohio owns the land under more than half of the whole block, and leases a 50-foot-wide sliver to the Trump Organization on a ground lease that extends until 2094. The Trump Organization currently pays about $2.2 million a year and in turn subleases half of that land to the Nike store to its north.

IBM also has offices at 51 Astor Place, where the company’s Watson Group division occupies 144,000 square feet and is the largest tenant. The owner of that property, Edward J. Minskoff Equities, is also the property manager for 590 Madison.





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