No tenants? No problem — at least, not yet.
Paramount Group’s CEO Albert Behler shrugged off the company’s 500,000-square-foot vacancy at 1301 Sixth Avenue, which the office REIT has marketed for a year. Barclays left the space, which takes up a third of the building, at the end of 2020.
“There is plenty of liquidity in the mezzanine debt market and no real distress,” said Behler.
Paramount Group will develop an “amenities center” in the 1.5 million-square-foot building to entice tenants, and refinance $850 million of debt on the property before the end of June, Behler said Thursday during the company’s first quarter earnings call.
Net income at the REIT was $1.88 million in the first quarter, down from $5.23 million during the same period last year. Few companies have hurried to lease new office space with most of their employees working from home. Paramount’s revenue declined $30 million last year compared to 2019; it has sold assets and cut costs to build up $488 million in cash.
Leasing activity is “nowhere close” to its pre-pandemic levels and landlords “fight for every deal out there,” according to Behler.
The company did notch some lease signings recently. Paramount worked with the Gershwin Theater to renew 156,000 square feet at 1633 Broadway. The theater is home to the hit musical “Wicked.” The renewal accounted for most of the 189,000 square feet the company leased in Q1, and foreshadowed New York City’s “return with gusto” from the pandemic, Behler said.
And just this month, Bracewell, a government consulting firm, signed a new lease for 54,000 square feet at 31 West 52nd Street. TD Bank will leave 130,000 square feet at the building this week, according to company managers.