A few blocks west and south of Orrick’s nice new offices, another law firm is planning to make a move: Proskauer Rose, currently on Broadway between 47th and 48th Streets. Proskauer’s move even made the New York Times:
A prominent law firm is expected to sign a lease next week for a new home in the vacant 40-story tower called 11 Times Square, ending months of speculation about the deal and providing another sign that the commercial real estate market may have hit bottom. The developer of the 1.1-million-square-foot glass tower, which is nearing completion at the southeast corner of 42nd Street and Eighth Avenue, is also negotiating with several companies who want to build an aquarium filled with sharks, rays and penguins….
Sharks and penguins. So Weil and Cleary are moving into the building too?
According to the Times, the Proskauer name might be displayed at the entrance to the tower, and possibly at the top, too. Given the high-traffic location of the building — in the heart of Times Square, across the street from Port Authority — it’s a nice bit of free publicity.
In addition to getting to brand the building, there are many other reasons — tens of millions of reasons, in fact — behind Proskauer’s move….
Proskauer is actually being paid to move away from its current address:
The Proskauer deal is being propelled by what is in effect a subsidy worth tens of millions of dollars from Morgan Stanley, the giant bank that is Proskauer’s current landlord at 1585 Broadway, between 47th and 48th Streets, which is also Morgan Stanley’s world headquarters. Morgan Stanley has from time to time offered Proskauer millions of dollars to vacate the 12 floors it occupies.
Proskauer is using the undisclosed sum from Morgan Stanley to offset the cost of moving seven blocks to 42nd Street and Eighth Avenue and building new offices in the unfinished space it is getting. SJP Properties is also offering substantial concessions. Other tenants would probably not be able to reap the same benefits.
A payment in the tens of millions is nice. But Proskauer could have done even better for itself if it had acted back in 2008:
Proskauer almost reached a deal at another planned tower on Eighth Avenue at the top of the market in 2008, when Morgan Stanley offered it about $100 million to move, according to two brokers. But the deal collapsed. Now the bank is offering substantially less.
Had that happened, it would have represented a nice bump up for Proskauer’s profits per partner that year. A number of law firms — most prominently Sullivan & Cromwell, which actually owns its space, acquired during a trough in the New York real estate market — reap significant financial benefits from shrewd real estate dealings.
Even if Proskauer missed out on a windfall in 2008, the move is a sign that it’s doing well in 2010. It wouldn’t be taking out a lease for this kind of space — 380,000 square feet, about 40 percent of a $1.2 billion tower — if it didn’t feel optimistic about its future.
Everything’s coming up Proskauer Roses!
Lease Deal Near for Empty Times Square Tower [New York Times]