Flagstar Bank Assumes Signature Bank’s Manhattan Office Lease

1400 Broadway. Image courtesy of CommercialEdge

Flagstar Bank N.A., a subsidiary of New York Community Bank and the buyer of the recently collapsed Signature Bank’s liquid assets, debt and service centers, has assumed the latter’s office lease at 1400 Broadway, a Class A, 919,405-square-foot office building in Midtown Manhattan.

The terms of the lease, which spans 11 floors and 313,109 square feet to be occupied through 2039, remain the same, save for a $3 per square foot decrease in rent in the first five years. Additionally, Empire State Realty Trust, the building’s owner and operator, will deduct $5.8 million from $6.4 million in straight-line reserve funding that had been collected over the first quarter of 2023. In total, Flagstar’s rent at 1400 Broadway will be reduced by 1.5 percent.

Signature Bank’s Broadway history

Signature Bank’s lease at 1400 Broadway began in April 2018, encompassing 91,181 square feet across the sixth, seventh and 27^th floors of the building. Over the next four years, the tenant expanded its Broadway footprint, more than doubling its space to 280,182 square feet across 10 floors in January 2022. The final, 32,297-square-foot expansion was signed in April of that year. The offices were located within half a mile from the former bank’s corporate headquarters at 565 Fifth Ave.

READ ALSO: What the UBS-Credit Suisse Deal Means for CRE

When Signature Bank closed in March 2023, it held assets worth a total of $110.4 billion, including $88.6 billion in deposits and $14 billion in commercial real estate loans. A week after its collapse, The Federal Deposit Insurance Corp. sold $38.4 billion worth of Signature’s assets, including $12.9 billion in loans and all 40 of the bank’s branches, to New York Community Bank for $2.7 billion, according to CNN Business.

A Midtown Manhattan office property

The renovated lobby at 1400 Broadway. Image courtesy of Empire State Realty Trust

Completed in 1930, the 37-story tower underwent renovations to its lobby, windows, elevators, electrical, HVAC and security systems in 2010, and was acquired by ESRT four years later for $310 million, according to CommercialEdge information. Amenities at the LEED, WELL, Energy Star and Fitwel-certified building include private lounges and meeting areas, a newly constructed assembly room and 18,000 square feet of ground-floor retail, as well as MERV 13 air and particle filters.

Newmark Vice Chairman Scott Klau, Executive Managing Director Erik Harris and Managing Director Neil Rubin currently oversee leasing and brokerage services at the property. Its tenant roster includes Kohl’s, Fragomen and Neon, among others.

Situated in one of the borough’s most dense office corridors, 1400 Broadway is surrounded by many of Midtown’s retail, dining, cultural, entertainment and hospitality offerings. The building has quick access to both local and express subway lines, and is within 1 mile of both Grand Central Terminal and Penn Station.

An adapting office market

With a slowed development pipeline and tepid deal volumes, the nation’s largest office market faces struggles with many of its core fundamentals. In part, this has been due to many relatively quick changes to how office work is conducted, brought on by the pandemic and the popularity of hybrid work, as well as the tenant flight to exclusively high-quality, amenity-driven spaces. According to CommercialEdge data, Manhattan’s office vacancy rate has increased 210 basis points year-over-year to 16.5 percent as of April, while its 15.1 million-square-foot pipeline marks a 21 percent decrease over the same period.

Still, the borough has been home to recent high-profile new leases and renewals. In January, Fox Corp. and News Corp. extended their commitments at 1211 Avenue of the Americas, occupancies totaling 1.2 million square feet.