UPDATED Tuesday, Aug. 14 at 10:27 a.m.: Private equity firm Providence Equity Partners is ditching its pricey office space at Sheldon Solow’s exclusive 9 West 57th Street.
The Rhode Island-based company signed a lease for 21,000 square feet at the Paramount Group’s 31 West 52nd Street, sources told The Real Deal.
Representatives for Providence Equity declined to comment.
A spokesperson for Paramount Group declined to comment, but on the company’s earnings call Thursday, executives made reference to a lease 31 West 52nd Street with a “prominent financial services firm.” The 11-year deal, they said, has a starting rent of $96 per square foot, with $105 per square foot in tenant improvements and 10 months of free rent.
The space is decidedly less expensive than the offices Providence Equity — which focuses on media and communications companies — occupies at 9 West 57th Street, where the company signed a lease for the full 47th floor back in 2009 at a reported rent around $200 per square foot.
Just months before the lease, Providence CEO Jonathan Nelson appeared on the cover of Fortune Magazine in May 2008 next to the headline “The Biggest Deal Ever,” a reference to a deal the company struck a year earlier to buy the parent of phone giant Bell Canada for $51 billion.
It would have been the largest buyout deal in history, but fell apart amid the financial crisis. After a string of bad transactions resulted in the company posting unfavorable returns, Nelson in 2015 told the New York Times that the company “grew too fast.”
Paramount Group, meanwhile, inked a deal with the law firm Pillsbury Winthrop at 31 West 52nd Street for roughly 90,000 square feet earlier this year.
At 9 West 57th Street, Solow will be facing significant vacancy when private-equity buyout giant KKR relocates next year to roughly 343,000 square feet at the Related Companies’ 30 Hudson Yards.
Solow is notoriously selective about the tenants he allows into his building, and often keeps large portions of the property vacant until a company comes along that he feels matches the building’s prestige.
In recent months, though, Solow lowered asking rents at the property as the availability rate in the Plaza District creeps up.
Neil Goldmacher and Brian Goldman at Newmark Knight Frank represented Providence Equity Partners in its lease with Paramount Group. The brokers declined to comment.
Correction: An earlier version of this report said KKR was taking 343,000 square feet at 10 Hudson Yards. It is not; it is moving to 30 Hudson Yards.