November 25, 2009 2:19 PM
Law Firm Leases Give Sagging CRE Market a Modest Boost
Posted by Brian Baxter
UPDATE: Dec. 21, 11:00 a.m. The San Francisco Business Times reports has a report on several Am Law 100 firms that have signed new leases in the Bay Area. Gibson, Dunn & Crutcher and Baker & McKenzie have also signed new leases in New York and Chicago, respectively.
Bankruptcies, job losses, scarce credit, and adverse court decisions have buffeted the commercial real estate market in recent months. But in New York, two large law firms are set to sign new office leases--and give the hard-hit market a positive jolt.
In a story this week on New York developer Joseph Moinian's debt-payment troubles, The New York Post reports that "Moinian was eager to crow over a major deal at 180 Maiden Lane," involving Stroock & Stroock & Lavan.
According to The Post, Stroock recently re-upped on its lease for 225,000 square feet of space in the downtown office tower. Half-empty buildings just like it are looking for tenants in cities across the country. Indeed, Karen Sloan from sibling publication The National Law Journal recently reported that there is more than 6 million feet of built-out law firm office space available throughout the U.S.
"I can't recall there ever being this much [space]," Thomas Doughty, a director at real estate services firm Jones Lang LaSalle, told Sloan. "It's a good thing if you're in acquisition mode, but it's a bad thing if you are warehousing space or you want to sublet space."
Contacted by The Am Law Daily, Stroock real estate chair Leonard Boxer said it was a bit premature to say the firm had an agreement.
"I don't know why [Moinian] let the cat out of the bag, it's not a done deal yet," Boxer says. "There are still some things that have to be worked out."
Not many, according to Stroock's broker, Stephen Siegel with CB Richard Ellis. Siegel told The Post that the deal was all but done.
"They had the right under their old lease to extend for another five years," Siegel said. "Our job was to help them extend it for another ten years, which we did."
Stroock's existing lease doesn't expire until 2013, so the new deal means the firm will remain two blocks north of Wall Street until 2023. Siegel refused to disclose details of the deal, but sources told The Post that it was in the "high $40s to low $50s" per square foot. Stroock's signing means Moinian's Maiden Lane property will stay fully occupied.
Another firm reported to have inked a major lease, this one for 550,000 square feet of space, is Paul, Weiss, Rifkind, Wharton & Garrison. Crain's New York reports that the firm renewed its lease at 1285 Avenue of the Americas for 15 more years.
According to Crain's, Paul Weiss considered moving its New York office to several other locations, such as 11 Times Square, a so-far-tenant-less 40-story building scheduled to open next year. Eventually, the firm decided to remain at its current location, where it already inhabits about 450,000 square feet (roughly one-third of the building). Crain's reports the firm first moved into the building in 1999 with a lease for 391,975 square feet.
With several smaller terms of the deal still yet to be signed off on, Paul Weiss chairman Brad Karp declined an Am Law Daily request for comment on the renewal.
In this recent Forbes op-ed, Stuart Saft, a real estate partner at Dewey & LeBoeuf in New York, writes about how a further collapse in the commercial real estate market could have catastrophic effects on the broader national economic recovery.
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