The Metropolitan Transportation Authority began a right-sizing initiative for its regional offices about two years ago and hired Cushman & Wakefield. The C&W team of Josh Kuriloff, Louis Wolfowitz and Jodi Roberts began working on this assignment along with other specialists.
Last year, C&W also began the ongoing process to sell the MTA headquarters buildings at 341-347 Madison Ave. for redevelopment.
Some of the divisions will move to 2 Broadway, into 150,000 square feet that the C&W team determined could be created by changing the furniture and “densifying” the employees.
But to oversee its commuter trains, Metro North Railroad needed 125,000 square feet in the Grand Central area.
Metro North already had 125,000 square feet in the Graybar Building at 420 Lexington Ave., operated by SL Green Realty Corp., under a lease that expires at the end of 2016.
While the natural place for a relocation, it was over 90 percent full with small tenants.
After Steven Durels of SLG told them many tenants had relocation clauses, the brokers began working with the stacking plan to ultimately move 15 of the tenants.
SLG extended its own ground lease on the building so they could also structure a “no action” condominium. This would keep the MTA exempt from paying New York City real estate taxes.
The project required new technology, conduits, gas lines and backup generators that all needed either to be snaked through the building or hoisted to the roof.
With a crane on site, SLG took the opportunity to replace the cooling towers and installed other generators for its own use.
But the MTA required that the costs of its build-out be completed for a guaranteed minimum price, so before signing a lease or doing any work, all the construction had to be pre-bid and approved.
Between all the tenants that needed to be moved and the main lease points, there were around 20 separate negotiations going on at the same time.
As Metro North also leases loading docks and freight elevators from the Graybar, that lease was also renewed and rejiggered. Meanwhile the MTA needed to obtain approvals from the city and state comptrollers, as well as the New York State Attorney General.
“Nobody ever waivered,” said Kuriloff. “It was very complicated and took two years to complete the lease as it was a non-stop chess game.”
The final deal for 266,000 square feet covers both the new space and extension of the current lease making them coterminous in 20 years and includes two 15-year leasing options.