Situation

● As New York City issued the COVID-19 emergency shutdown of March 2020, the Republic of South America (SACG) engaged Philip Weiss to secure a new Manhattan headquarters facility for its consulate general and permanent mission to the United Nations.

● As a 30+ year tenant at its eastside location near the United Nations, SACG was requested by the new landlord of the building (NYU Langone Medical Center) to vacate its floor as the hospital needed to consolidate its occupancy in the last remaining space in the building.

● The urgency of the situation, compounded with the tenant’s holdover of its expired lease, pushed SACG into the market for a furnished, move-in condition space.

 

 

Insights

● SACG’s requirement for 35-40,000 square-feet was at a projected rent of approximately $55-60.00 per square feet and for a term of 5 years, which was significantly below market conditions for direct space (most of which would require a new build-out to accommodate SACG’s requirements).

● Sublease space could potentially offer SACG the deal they were looking for; however, the consulate could only sublease from another consulate to be in compliance with the terms of most “use” clauses (and the requirements of the US government). SACG was looking for a “needle-in-the-haystack” solution, which to date was going to be very difficult to find.

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Operational Solution

After combing the East Side submarket within a 15-18 minute walk of the United Nations and reaching out the larger consulates for surplus space within this parameter, the “needle-in-the-haystack” solution was found, a 5+ year sublease for the Government of Great Britain. Located in a large Third Avenue property, the two (2) contiguous 26,000-square foot floors with a glass-enclosed interior staircase were vacant, fully furnished and in move-in condition. Additionally, the space had all the special needs required by SACG including glass security vestibules, supplementary HVAC, IT installations and assembly certifications for events. Given that the premises had been vacant for 3+ years, a very aggressive rent and rent abatement concession was secured which addressed SACG’s stringent financial requirements.

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Resources Applied

Philip Weiss managed a group of professionals (in-house as well as outside consultants) to assess and confirm the architectural suitability, develop furniture inventories and construction estimates for future alterations. SACG was able to relocate to the space within 90 days after execution of the sublease as a result of the secured condition of the space and was able facilitate its initial modifications within the rent abatement period, thereby minimizing any out-of-pocket costs to the tenant.

 

Enterprise Impact

SACG seamlessly relocated to their new headquarters space without disrupting the operation of its consulate and the permanent mission. Since the landlord of the building is one of New York’s most prestigious family-owned real estate companies, the landlord’s cooperation in expediting the sublease and the alternations was paramount to the success of the project. In addition, the new location is proximate to the SACG-owned residential property (located around the corner from the office) that further establishes the consulate’s presence in the neighborhood and provides accommodations for visiting dignitaries. The space is properly sized to meet SACG’s needs for years to come and most importantly, the sublease transaction provided a foundation of operations that greatly exceeded their expectations. This transaction also properly positioned SACG to negotiate a new direct log-term lease with the landlord at the end of the sublease term at very favorable rates.