Savills Lends to Law Firm's Future Profitability with Headquarter Renewal
Goodwin Procter, a Boston-based law firm with seven offices across the country, had outgrown its 100,000-square-foot New York office at 599 Lexington, where the firm had been located for eight years. The firm’s lease was set to expire in November 2008, so it started the real estate process in January 2006. Goodwin Procter needed approximately double the amount of space it was leasing, as well as expansion options to accommodate its project growth.
As witness to the shrinking supply of Class A office space and unprecedented escalating asking and taking rents, Goodwin Procter’s partner in charge of real estate approached Savills to locate at least 200,000 square feet in a prestigious building, owned by a reputable landlord and accessible to transportation. The firm considered moving Downtown but opted to remain in Midtown in proximity to the majority of its clients.
Savills and Goodwin Procter had narrowed their search to the Verizon Building, which Equity Office Properties sold to Blackstone Real Estate Group near the end of their lease negotiation. Blackstone rejected the rental rate to which EOP had agreed and responded with a number that Savills and Goodwin Procter felt was unrealistic, even within a market with demand that was outpacing supply.
Goodwin Procter revisited the new New York Times Building, a building initially rejected by the firm because of its location far west. Since that time, however, the building has received rave reviews and has since signed three other law firm tenants. In July 2007, the firm signed a 216,000-square-foot lease, 154,585 square feet (or five floors) from the New York Times, which owns 52% of the building as an office condominium and found that it had excess space to lease, and 62,342 square feet (or two floors) and an expansion floor from Forest City Ratner, the landlord who developed and owns the remainder of the building.
Leasing the majority of its space from the New York Times gave Goodwin Procter the advantage of a below-market rental rate generally associated with sublease space, however since the New York Times also owns its portion of the building; Goodwin Procter receives the attendant benefits of a direct lease. Goodwin Procter will also enjoy the state-of-the-art infrastructure that accompanies new construction, as well as prominence in one of the most talked about buildings in Manhattan, which is now home to several prominent tenants.