Lukoil Says “Privet” to 1095 Sixth Avenue; Tenants at 11 Times Square to Follow?

Is a recent deal at the renovated – but not LEED-certified – 1095 Avenue of the Americas a harbinger of more good news to follow at the other end of the 42nd Street corridor for the LEED Gold-hopeful 11 Times Square?

1095 Sixth Avenue

Some of those rumored green shoots in the local commercial leasing market appear to be sprouting in green buildings. Last week, Lukoil Pan Americas – the American subsidiary of the Russian oil and gas giant – signed an 11-year, 20,400-square-foot lease at the Blackstone Group’s 1095 Sixth Avenue for $85 per square foot. You’ll recall that the tower recently underwent a 2-year, $408.9 million renovation; designed by Moed de Armas & Shannon Architects and Gensler, the project included replacing the building’s entire marble exterior with an energy-efficient glass curtain wall.

What’s particularly notable about the Lukoil transaction is that the firm is taking raw space on the 33rd floor- not subletting it from a downsizing financial services tenant (as has been the case with many of the deals we’ve noted here at gbNYC during 2009, including the 100,000 square feet taken by the stock trading company Instinet at 1095 Sixth Avenue back in July). Blackstone agreed to build the space out for Lukoil, which will consolidate its crude and refined oil products trading operations from offices in New Jersey and on Long Island. Studley represented Lukoil in the deal with CB Richard Ellis for Blackstone. Occupancy is slated for the first quarter of 2010.

We’ve discussed 1095 Sixth Avenue in a variety of contexts here at gbNYC, including its location across the street from the highly touted LEED Platinum-hopeful Bank of America Tower and the corresponding implications of Blackstone’s decision not to pursue any formal LEED certification for the project from USGBC. With respect to the Lukoil deal, it remains to be seen whether the transaction is one-off or indicative of any type of broader upward trend for local green commercial office leasing. Either way, it’s worth checking out this video of prebuilt interiors at 1095 Sixth Avenue featuring MKDA’s Michael Kleinberg, whose firm designed a program of fitouts for Blackstone aimed specifically at attracting high-end tenants.

One reason why it could be the latter is that the deal also comes amidst rumors – reported last week in Real Estate Weekly – that law firm Proskauer Rose is in talks to become SJP Properties’ anchor tenant at its LEED Gold-hopeful 11 Times Square, whose unsuccessful search for tenants of any size has been an ongoing story here at gbNYC for close to two years. Proskauer was originally slated to take 400,000 square feet at another of the Eighth Avenue corridor’s star-crossed green building projects – Boston Properties’ 250 West 55th Street – which stalled last year in the aftermath of the credit crisis. Although SJP has apparently dropped its asking rents at 11 Times Square from the low $100s to the $70s, the 38-story building remains completely empty as deals remain available in more desirable submarkets thanks to the continued glut of available space for sublease. We’ll be keeping a close eye on 11 Times Square over the holidays and any corresponding impact that a deal there would have for the Times Square submarket at large.

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gbNYC is a multi-disciplinary consulting and real estate services firm. In addition to representing office tenants and commercial buyers in leasing and acquisitions, we also provide innovative consulting solutions from a unique, green building perspective. We advise on green building financial incentives, comment on proposed green building marketing strategies, author white papers, treatises, and market analyses, organize seminars on the LEED process and professional accreditation, and provide advice and analysis on green building risk management and the overall state of green real estate, leasing, and construction, in New York City and beyond.

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