Verizon has given up on relocating employees to Essex Crossing and has placed its 143,000 square feet of raw space up for sublease.
The space on floors three to five at 155 Delancey Street comprises the wide commercial base — dubbed the Offices at Essex Crossing — of the new rental tower the Artisan, which is part of the larger Essex Crossing project.
Sources told TRD that Howard Fiddle of CBRE is handling the sublease of the floors that were never built out.
Signed in the fall of 2021, when some firms still expected remote work to recede, Verizon’s 15- to 20-year lease also provides for branding and signage on the façade as well as 3,500 square feet of private outdoor space on the sixth floor.
The deal was signed at roughly $80 per foot with over $130 per foot toward building out the space, the New York Post reported at the time. It is unclear if that work allowance could be transferred to a new tenant.
The telecom giant signed the pioneering deal expecting to move hundreds of employees from its landmarked, Raymond Hood-designed 140 West Street by the World Trade Center to the Lower East Side as the pandemic was receding in 2021.
But employees have continued to work from home, a societal shift projected to deplete office values in New York City by 44 percent.
Verizon also had an option — which expired late last year — to pick up the remaining commercial space that includes the 35,000-square-foot second floor of 155 Delancey plus another 176,000 square feet of offices in the base of the neighboring 145 Delancey Street, all of which is still being marketed by Cushman & Wakefield.
Some of that space is now being divided into pre-builts. Sources claimed there has been renewed interest for full-floor deals with office leasing picking up this fall.
Both buildings have direct access to the giant underground Market Line, which is filled with food offerings. Those vendors would also benefit from any leases that bring more foot traffic to that lower level.
Other Essex Crossing retail spaces are occupied by Indian restaurant Dhamaka, Trader Joe’s, the International Center of Photography and a 14-screen Regal Cinemas. Verizon’s lease allows for some meetings in the movie house.
Any sublease would have to be approved by Essex Crossing’s developers — Taconic Partners, L+M Development Partners, BFC Partners, the Prusik Group and Goldman Sachs’ Urban Investment Group.
Last year, as part of $466 million in new debt for Essex Crossing, Deutsche Bank provided a $285 million loan for the office space, replacing an earlier construction loan. It was described as a short-term bridge loan for the developers to build out Verizon’s space and finish leasing the remainder. Once it’s fully leased, the partners planned to head back to the market for permanent financing.
Cushman & Wakefield declined to comment while Verizon, CBRE, and Taconic did not immediately respond to emails for comment.
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