RXR Realty has its work cut out to fill 5 Times Square

Real Estate

It’s battle stations at the Crossroads of the World, where Scott Rechler’s RXR Realty is ramping up to re-fill its 39-story, 1.1 million square-foot 5 Times Square, which will soon be empty.

It opened at the corner of Seventh Avenue and West 42nd Street in 2002 as one of the quartet of commercial giants that defined the “new Times Square.” Ernst & Young was former owner Boston Properties’ anchor tenant.

But in 2022, EY, as it’s now known, will move to Manhattan West. The retail spaces are already vacant. RXR has its work cut out now that leasing has slowed to a crawl, Times Square remains mostly desolate, and companies are putting oodles of space up for sublease.

RXR, which owns the tower in a joint venture with investor David Werner, is spending $50 million more on upgrades — notably, an elevator connection for the first time between the lobby and the huge subway station below.

RXR managing director Bill Elder and his team of brokers politely chuckled when we asked our dreaded, pandemic-times question:

Are you guys crazy to think it can be done?

Elder assured us, “We’re not out of our minds. With the election over and the vaccines announced, people are starting to become re-engaged with the market. Remember, there were 19 million square feet of [corporate space] requirements before the pandemic, and most of it is still out there.

“I think by mid-year 2021, a lot of people will be outsourcing solutions to their space needs.”

Joshua Strauss, leader of a Newmark team on board to market 21,000 square feet of retail space, agreed, “We can take our time putting together our market approach in a very deliberate way.”

RXR executive vice-president Whitney Arcaro concurred. “We are fortunate to be an institutional owner that can take advantage of the lead time,” she said. RXR’s portfolio boasts 26 million square feet of metro-area offices, of which 19 million square feet are in the city.

The landlord’s confidence in 5 Times Square is based on its central location, mass-transit proximity, and column-free floor plates of 31,000 square feet with floor-to-ceiling windows.

In addition to the new subway link, RXR is replacing obsolescent exterior signage with giant LED displays, redesigning the lobby, and creating a tenants’ amenity center to be managed by a big-name food-and-beverage operator.

RXR must compete for office tenants with newer properties — including in the Hudson Yard-area towers and at 425 Park Ave.

But 5 Times Square’s rents will run from $80-$100 per square foot on higher floors — a bargain compared with the cost at other locations. CBRE’s Robert Alexander, Ryan Alexander, Michael Affronti and Taylor Callaghan will sift offers.

Strauss declined to cite asking rents for the stores. He said tenants will likely be large corporate users, including “experiential” venues, entertainment companies and an array of traditional retailers.

“We’re not interested in landing the first tenant who comes along, the bottom feeders,” he said. “We are patient.”

Brooklyn Navy Yard finding tenants

The Brooklyn Navy Yard scored a salvo of new leases since March — a whopping 162,428 square feet. The city-owned, 300-acre contemporary industrial park has also seen more than 81,000 square feet of renewals.

The “vast majority” of the Yard’s total 5 million square feet are leased, according to Navy Yard chief development officer Johanna Greenbaum. Rents at many Yard buildings run about $40 per square foot.

Rendering of Building 77's interior
Rendering of Building 77’s interior

But higher numbers are in store for top floors of what are known as Building 303 and Building 77, which are hitting the market for the first time.

CBRE’s Brad Gerla is expected to be named the leasing agent this week. Up for grabs are the 50,000 square-foot 15th floor of Building 303 and, at Building 77, the 70,000 square-foot 15th floor as well as 8,000 square feet indoors and 16,500 square feet of outdoor roof space on 16.

Gerla is targeting tech and creative companies, many of whose employees “live close to the Navy Yard, some within walking distance,” he said.

The complex’s glam properties are Steiner Studios and the new office building Dock 72. But repurposed World War II-era buildings are the Yard’s historic heart.

The Brooklyn Navy Yard Development Corporation earmarked $187 million to convert jumbo Building 77 from a former US Navy facility into a design and light manufacturing hub. Building 303, in the Admirals Row section developed by studio founder Doug Steiner, opened this fall for light manufacturing and creative tenants.

Greenbaum attributed the Yards’ leasing success to close cooperation with tenants during the pandemic and to “the proximity of workers, a huge contributing factor. The creative workforce largely lives in Brooklyn.”

Gerla said, “Johanna has done an incredible job of creating a real urban eco-system” out of the Yard’s diverse tenant mix. For example, women’s apparel brand Lafayette 148 employs creative designers and seamstresses “who all live in Brooklyn,” Greenbaum said.

Other recent signings include Danish footwear and leather retailer ECCO’s first studio outside Denmark, start-up electric motorcycle maker Tarform, and women-owned jeweler Catbird.

And at One Vanderbilt …

The insatiable leasing machine plows on at SL Green’s One Vanderbilt. The latest new office tenant is executive search/advisory firm Heidrick & Struggles, which just signed a 12-year lease for 36,031 square feet on the entire 25th floor.

The deal brings the 77-story, 1.7 million square-foot skyscraper’s office floors to 70.1 percent leased. The largest tenants include TD Securities, TD Bank, Carlyle Group and McDermott Will & Emery.

There’s a substantial new retail lease as well. One Medical, a brand of 1Life Healthcare, signed for 4,924 square feet on the ground and second floors. One Medical offers membership-based primary care and other health services.

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