SL Green Signs 266 KSF Lease with MTA in Manhattan

By Barbra Murray, Contributing Editor

With a new lease in place at Midtown Manhattan’s Graybar Building at 420 Lexington Ave., Metro-North Commuter Railroad Co. will continue to call the 1.2 million-square-foot skyscraper home, but it will be a much bigger home. Metro-North’s parent, New York State’s Metropolitan Transportation Authority, recently entered into an agreement with building owner SL Green for the transportation agency to renew its current lease of 133,500 square feet and expand the space to encompass aggregate 265,900 square feet.

The 20-year deal comes well in advance of the scheduled January 2016 expiration of the original lease. Metro-North relied on Cushman & Wakefield to orchestrate the transaction and to shop around before signing on the dotted line. Other locations that had been up for consideration include 205 E. 42nd St., 150 E. 42nd St. and 686 Third Ave. Ultimately, it was the Graybar Building that best met Metro-North’s criteria, a list that comprised, among other requirements, additional elbowroom, convenient access to the MNR and Long Island Rail Road rail lines and close proximity to MTA headquarters at 2 Broadway.  And, as noted in an MTA report, the space had to constitute, or be made to constitute, a separate tax lot.

The deal was not for the faint of heart.  As Steven Durels, executive vice president and director of leasing and real property at SL Green, noted in a prepared statement, “This was an exceedingly complicated transaction, which took nearly 20 months to complete and involved a plethora of moving parts, included the participation of numerous stake-holders.”

To make it all happen, SL congregated 34 separate spaces and relocated or recaptured 15 occupied tenant spaces. Even underutilized storage and mechanical areas were lumped into the group to create the additional 132,400 square feet of office space for Metro-North’s expansion.  The agency’s total office accommodations at the  modernized 1920s-era high-rise will consist of its existing space on the 11th and 12th floors in their entirety and part of the 22nd floor, as well as the new square footage covering the entire 10th floor and notable segments of the 2nd, 3rd and 5th floors.

It’s a win-win for the tenant and the owner. Upon completion of construction of Metro-North’s expanded digs, the Graybar Building will boast an occupancy level exceeding 94 percent. The overall office vacancy rate in Manhattan in the third quarter was 10.6 percent, according to a Cushman & Wakefield report.