Anchor Tenant is Credit Crunch Casualty at SJP Properties’ LEED Gold Hopeful 11 Times Square

A French bank that had been in talks to anchor 11 Times Square appears instead to be on the verge of subleasing space elsewhere in Midtown.

The New York Observer today confirmed a story that first appeared in Real Estate Weekly a couple of weeks ago (which we noted here at gbNYC) regarding the French bank Natixis, which has been on the hunt for office space in Manhattan since earlier this year. It appears that the bank is close to inking a deal to sublease 270,000 square feet at 277 Park Avenue from JPMorgan Chase, which is moving into the former headquarters of Bear Stearns at 383 Madison Avenue. The deal would be a major blow for SJP Properties, which is still without an anchor tenant for its speculative, LEED Gold hopeful 11 Times Square that continues to rise along Eighth Avenue. The firm had held its asking rents steady in the $100 per square foot range, though the recent flood of Class A space that has become available from financial services tenants looking to downsize may force it to reassess its position, as Natixis will pay around $80 per square foot for its space at 277 Park.

Although we recently noted that SL Green’s ability to secure a similarly-sized and situated tenant (BDO Seidman) at 100 Park Avenue might bode well for 11 Times Square, the wake of the credit crunch seems to have assisted Natixis in securing the type of less expensive sublease that we suggested could spell trouble for 11 Times Square. Back in January, we noted a quote from SJP boss SJP boss Steven Pozycki, who stated “[t]here’s just not many of these new green buildings that are being built in the city.” Pozycki also noted the lack of available space in new green towers from the New York Times, Hearst, Bank of America, and also pointed to Boston Properties’ 250 West 55th Street. “Tenants will come to [11 Times Square],” he said at the time. The promise of brand-new, high-profile Class A office space that winds up LEED Gold-certified to boot may still help SJP bag an anchor tenant, but the loss of Natixis demonstrates that commercial office space in Manhattan- green or not- is not immune to the ongoing impacts of the credit crunch.

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