By Daniel Geiger
Arup, a structural and construction engineering firm, is in talks to move its downtown headquarters to 77 Water Street, according to sources.
The company, which was founded in England after World War II and has offices around the globe, currently has its New York headquarters at 155 Sixth Avenue, a building in Lower Manhattan owned by Trinity Real Estate, the real estate arm of the Trinity Church. Arup’s lease is set to expire in the building in 2014.
The space at 77 Water Street is being sublet by Goldman Sachs, which leased nearly the entire 600,000 s/f building several years ago, but reconsidered the space and decided to sublease instead. Goldman has moved aggressively during the downturn to fill the vacancy, cutting some of the best deals in Lower Manhattan, with rents in the $20s and $30s per s/f and alluring free rent and work allowance packages. Tenants have been lured to take hundreds of thousands of s/f as a result.
Sources familiar with Arup said that the company is considering a block of floors in the base of 77 Water Street, totaling about 100,000 s/f. The deal has not yet been completed, sources said, but is being negotiated for rents that start in the $30s per s/f. Under the deal, Goldman would give Arup $85 per s/f to be used to cover the cost of interior construction and a year of free rent, a generous incentive package in a Manhattan market that is beginning to tighten.
Tricia Foster, a spokeswoman for Arup, said she couldn’t comment on the specifics of the company’s leasing progress, but confirmed that Arup was looking to relocate from 155 into about 100,000 s/f and that 77 Water Street was a potential candidate in the move.
Although the construction industry was battered during the recession, signs of life have started to sprout as developers have cited the need for new commercial construction to update the city’s increasingly antiquated office stock. Billions of dollars of public sector projects also continue, albeit at a slower pace and smaller scale than during the boom.
On Wednesday, at a breakfast hosted by the New York Building Congress, Chris Ward, the executive director of the Port Authority, listed a host of construction and maintenance projects that the Port Authority is considering, including refurbishing the suspension cables for the George Washington Bridge and plans to renovate or refurbish the Goethals and Bayonne Bridges, among other capital expenditures.
Arup has worked on a number of prominent infrastructure and transit projects in the city, including the Fulton Street Transit Center, an over $800 million station development and track improvement project. Arup was hired as the lead engineer by the MTA. The company has also provided design and engineering services for the Second Avenue Subway and terminal development at JFK Airport for JetBlue Airways, as well as an upcoming project to redevelop and expand Terminal 4 for Delta Airlines.
Foster, the spokeswoman for Arup, said that although the company’s structural engineering practice usually receives attention because it works on high profile developments with star architects like Frank Gehry and Renzo Piano, it is involved a full range of engineering services, including civil engineering, theater construction and acoustics, fire safety, and mechanical and electrical engineering.
One of the advantages of 77 Water Street is that it could give Arup room to expand. Although the firm occupies close to 100,000 s/f at 155 Sixth Avenue, Foster said that the firm wanted to have access to space for growth as the economy and the construction market rebounds. It’s not clear how this would be included in the deal, but there may be options for Arup to expand in the future at 77 Water.
“We want to grow and we want to show [through the move] that we’re positioned to,” Foster said. “Right now, the engineering and construction market is not great but there signs of life and we’re involved in a number big projects so we want to make sure we can grow with the economy as it comes back.”