NYU to Lease 1.1 MSF at Vornado Property

November 7, 2024

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The university will take over the office space in the Manhattan building once Meta’s lease expires.

NYU has agreed to master lease 1.1 million square feet of office space at Vornado’s 770 Broadway in Manhattan — NYU has agreed to master lease 1.1 million square feet of office space at Vornado’s 770 Broadway. *Image courtesy of CommercialEdge*

With Meta Platforms set to leave 770 Broadway in Manhattan’s East Village early next year, New York University has agreed to master lease the entire 1.1 million square feet of office space at Vornado Realty Trust’s 14-story mixed-use building.

Under a letter of intent, NYU has an option to buy the office space in the 30th year and the 70th year of the lease.

“Both parties have signed a detailed letter of intent and expect to execute final binding papers shortly. I expect the closing and rent commencement would occur in January,” Vornado Chairman & CEO Steven Roth said during Tuesday’s third-quarter earnings call with analysts. “The master lease will provide for an upfront payment of prepaid rent sufficient to pay off our $700 million loan on the property, as well as an annual net rent over the lease term.”

Further details about NYU’s plans for the office space were not disclosed but the private university is one of the city’s largest and wealthiest landlords with more than 100 properties in Manhattan and Brooklyn.

“770 Broadway is an exciting and important development, critical to fulfilling NYU’s bold aspirations in science and tech, and important because of its proximity to our campus core’s science facilities. We look forward to finalizing this transaction and then sharing more about our plans,” John Beckman, NYU spokesperson, told Commercial Property Executive.

Roth first hinted at a major upcoming deal during the firm’s August second-quarter earnings call. At that time, he said they had a “handshake deal” with an unnamed tenant to master lease all the office space.

Building spotlight

Meta, parent company of Facebook, Instagram and other social media apps and a tenant at the building since 2018, had at one point leased about 775,000 square feet but currently leases 500,000. Earlier this year, Meta announced it was cutting 225,000 square feet of space there as of June. In July 2022, the social technology giant halted plans to expand space at 770 Broadway and in the Hudson Yards development on Manhattan’s Far West Side as it reduced office space at numerous sites around the country amid layoffs.

770 Broadway in Manhattan’s East Village. *Image courtesy of CommercialEdge*

Vornado has owned the building since acquiring it in 1998 for $149 million. Completed in 1906, the building takes up an entire block between Ninth Street on the north, Fourth Avenue to the east, Eighth Street to the south and Broadway to the west. Vornado completely renovated the LEED Gold certified property, located on 1.44 acres, in 2000.

The property’s most current debt, a five-year $700 million loan from a private lender, was originated in July 2022 and is set to mature on July 1, 2027, according to CommercialEdge data.

The building has more than 166,000 square feet of retail including a Bank of America on the street level. Wegmans Food Markets occupies two levels—a lower level and street level—totaling about 87,500 square feet.

Vornado’s leasing activity

In late September, Vornado announced accounting firm Weaver and Tidwell LLP had significantly expanded its space at PENN 1, Vornado’s recently redeveloped 2.5 million-square-foot office tower in the Penn District. The firm had been occupying 8,000 square feet on a portion of the 32nd floor but will now lease the entire 28th floor, with a long-term agreement for 36,500 square feet.

Vornado has leased 2.1 million square feet of office space year-to-date in Manhattan, Roth said during Tuesday’s earnings call. He added he was confident the REIT would sign between 3.5 million square feet and 3.8 million square feet of Manhattan leases this year.

Current office occupancy across Vornado’s portfolio was 87.5 percent in the third quarter, down from 89.3 percent in the second quarter, primarily due to the previously announced Meta expiration at 770 Broadway, Michael Franco, Vornado’s president & CFO, said during the earnings call.

“As occupancy rises, our earnings will go up. With a pending full building master lease at 770, our office occupancy increases by 330 basis points to 90.8 percent,” Franco told the analysts.