Right after completing the largest new lease of last year at 55 Water Street, the Health Insurance Plan of New York realized it needed even more space.
At the end of last year, HIP signed up for an additional 69,500 square feet there after already signing on for a mammoth 486,000 square feet in April.
Last year was a good year for insurance companies.
While law firms received most of the attention for leading the market, and financial services, as always, formed the foundation of the leasing market, insurance made a strong showing, finishing third in leasing overall.
Downtown, insurance led all industries in leasing in 2003, with 953,000 square feet. Financial services firms finished a distant second in that market with 365,000 square feet.
“The insurance industry has been strong over the last 15 months,” said Peter Hennessey, managing principal for The Staubach Company in New York, which has represented several insurance firms over the last year. “Insurance and law firms have been leaders out of the recessionary cycle. They haven’t been dramatically affected during the cycle, either.”
According to Cushman & Wakefield, law firms leased a total of 2.1 million square feet in Manhattan last year, financial service companies leased 1.4 million square feet and insurance companies leased 1.3 million square feet.
Overall, Hennessey said insurance companies, like law firms, have been in a good position to take advantage of low rents. There has been consolidation in the industry, but it hasn’t had a major effect, he said.
“In other businesses, there is some level of uncertainty about where they are headed,” Hennessey said. “Insurance companies are making commitments for spaces that expire in two or three years. They are thinking ‘why not make a commitment now’, when there are market lows.”
The large HIP deal in April, a big boost to downtown, came at a unique moment for the company, when it was outgrowing its existing facilities and considering going from non-profit to for-profit status. Downtown incentives were also a key part of the deal.
When HIP moves into its new digs at 55 Water St. in July, it will occupy the entire north building as well as part of the south tower. Brian Given of GVA Williams represented HIP in the recent expansion deal in December. Mary Ann Tighe, Brad Gerla, Howard Fiddle, Ken Rapp and Tom Shirocky of CB Richard Ellis handled the owner’s side.