A complicated deal to bring trading operations for the French financial firm Natixis into the base of the pricey midtown office tower 9 West 57th Street has fallen apart, several people with knowledge of the situation say.
The potential deal had been a surprising about-face for Natixis, which last year leased a roughly 190,000 s/f block of space at 1251 Avenue of the Americas in an apparent decision to relocate its operations from 9 West 57th Street, where it has two floors high in the building, 35 and 36.
Though 9 West 57th Street charges some of the highest rents in the city, Natixis calculated that it would actually be cheaper to remain in its existing space and expand onto the lower two floors of the building, which total about 75,000 s/f, because the two base floors had an existing trading installation that had been built by the former tenant in the space, Bank of America.
Replicating that infrastructure as well as the facilities it had higher in 9 West at 1251 Avenue of the Americas would cost Natixis millions of dollars, as much as as $30 million by one source’s estimate.
But there was a hidden snag in the deal. Bank of America had outfitted 9 West’s second story trading floor with a build out sufficient to accomodate nearly 500 traders. Yet it had never been able to actually assign that many people to the floor because, according to several sources, Sheldon Solow, 9 West 57th Street’s landlord, had refused to make physical alternations to the space, including the installation of an additional stairwell, that were necessary to earn the proper certificate of occupany for that headcount. Bank of America wound up installing far fewer people into the space, about 300 according to sources.
“Sheldon for years fueded with Bank of America,” one person said, who asked to remain anonymous because of the sensitivity surrounding the broken deal.
Somehow however, the fact that the second floor’s certificate of occupancy was still sufficient for only about 300 traders had gotten lost in Natixis’s negotiations to take the space. When the bank balked after learning that it would not be able to cram as many people into the space as it had originally bargained, Solow proposed spreading the bank’s trading operations onto the third floor. Natixis apparently resisted that idea because it would require it to build trading facilities on that floor, defeating the whole point of moving to 9 West, which was being done to allow it to save on construction work. Solow in turn refused to install the stairwell that would allow occupancy on the floor to be increased because it would interfere with retail space on the ground floor of 9 West.
A team from the real estate services firm Jones Lang LaSalle led by one of the company’s top executives, Scott Panzer, handles agency work at 9 West for Solow. Natixis is represented by a team from Cushman & Wakefield headed by John Cefaly, a high level dealmaker at the firm. Neither could be reached for comment.