Asking Rents at LEED Gold Hopeful 11 Times Square Drop by 25 Percent

At a recent luncheon, SJP Properties indicated that although it had held fast to asking rents of $100/sf at the LEED Gold-hopeful 11 Times Square, a drop into the $70s isn’t out of the question.

The Real Deal is reporting that SJP Properties’ head Steve Pozycki told a luncheon crowd at the Cornell Club earlier today that the firm “would like a $100 per square foot rent but we would be real happy with a high $70 rent” at its 40-story, LEED Gold-hopeful 11 Times Square project, whose quest for tenants at premium rents has been a topic we’ve followed closely here at gbNYC. As recently as this past December, SJP was holding fast at an asking rent of $100 per square foot for the speculative office tower and, despite coming close to deals for anchor space on a number of occasions, it has still failed to ink a single tenant to a lease. Although SJP has consistently refused to back off its asking rents over the past year, even as the economy has deteriorated, the project is obviously a victim of the horrendous commercial office market; Newmark Knight Frank recently reported that asking rents in Midtown are down 31 percent over March of 2008.

Nevertheless, The Real Deal ‘s Adam Pincus interviewed CB Richard Ellis chairman Stephen Siegel after the lunch, whose firm is 11 Times Square’s exclusive leasing agent. Mr. Siegel stated that CBRE still believes it “could arrive at or near that [$100 figure] with the tower floors.” Interestingly, back in December, Mr. Siegel told the New York Post that “[a]t this moment in time we are in no rush [to enter into any leases]. We have a year before it’s completed and several years of carry built into the pro forma. While people will pay a premium, whether it’s $20, $30 or $10 a foot we don’t know yet.”

Our interest in 11 Times Square here at gbNYC is grounded in the tower’s green design features and pending LEED certification, which have been heavily marketed by the project team. If the project does ultimately fetch the type of premium suggested by Mr. Siegel- even in this down market- it would be interesting, though certainly anecdotal, support for the role of LEED certification in driving higher asking rents in local commercial office buildings. On the other hand, 11 Times Square’s inability to land any tenants, despite its green features and pending certification, has been one of the reasons we’ve been paying such close attention to the project. Construction at 11 Times Square should wrap up this coming fall; we’ll continue to monitor leasing activity closely here at gbNYC.

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