Tenants still negotiating downtown
Just days after 17 State St. reopened for business downtown after having been deluged with floodwaters by Superstorm Sandy, the building's landlord had a bit of good news to report. Two tenants who had been negotiating for space are moving forward with their negotiations. Steve Morrows, a leasing director at RFR Realty, which owns the 42-story, 25-year-old downtown tower, said a pair of deals he has been arranging are still on track. He has taken the negotiations as a bid of confidence in the property, as well as the larger office district downtown. "The tenants still want to be here," Mr. Morrows said. "We have not had to drop rents, and we have not had tenants walk away." Mr. Morrows, who oversees leasing at 17 State St. with RFR colleague A.J. Camhi, said he is near completing a 4,000 square foot deal on the building's 32nd floor at rents in the $50s per square foot. Another larger lease, that he said could range from 30,000 to 45,000 square feet, is also in the works. "Those talks continue to move forward," Mr. Morrows said. Lower Manhattan's vulnerability to floodwaters became glaringly apparent during the powerful storm, when a 14-foot surge doused sections of the financial district. The event has left several office buildings inoperable. Owners share concerns about whether the disaster will make tenants wary about setting up shop in a neighborhood that has proven to be vulnerable to powerful storms and rising waters. In fact, a number of tenants who were in the middle of lease negotiations before Sandy struck have suspended those talks as they try to evaluate the wide ranging implications of the event, as well as landlords' response to them in terms of making their properties more storm resistant. In fact, several brokers said that leasing activity has slowed dramatically since the storm. RFR Realty has raced however to bring 17 State St. back online, restoring full power to the property on Monday, as other large office towers in the vicinity, such as One and Four New York Plaza and 55 Water St. remain out of commission. Mr. Morrows said the building's expedited repair impressed these prospective occupants and kept them in the negotiations. "Tenants notice the efforts we have made and how quickly we've been able to fix the damage," Mr. Morrows said. "It's one of the reasons why they haven't left the bargaining table." To get 17 State St.'s power running, RFR Realty parked a large Caterpillar portable generator outside and ran electricity up to a 3,900 pound switching box it installed on the second floor after its power systems were destroyed in the basement by the flood. The setup will allow the building to run normally while repairs are made to its permanent systems. Before the storm, the company had just completed a lease at the property, a 7,300 square foot deal for another portion of the 32nd floor with a financial firm called Bats Global Markets Inc. The company took the space for rents in the $50s per square foot, Mr. Morrows said.
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