By Daniel Geiger
Wells Fargo is in talks to lease a roughly 250,000 s/f block of space at 150 East 42nd Street in which to relocate and consolidate a number of its offices in Manhattan, according to sources familiar with the bank’s real estate search.
San Francisco-based Wells Fargo, one of the largest banks in the U.S., has been seeking to consolidate several offices in Manhattan. In January, it was close to a deal to take space at 120 Park Avenue, a vacant office tower, but was passed over late in those negotiations when that building’s landlord, Global Holdings, arranged to a deal with the media and financial company Bloomberg LP instead for the bulk of the over-600,000 s/f building’s space.
After getting bumped, Wells Fargo was said to be shopping for other options in midtown. But as the real estate market has recovered in the wake of the recession, large office spaces for lease have become harder to find. The scarcity of big blocks has been driven by activity from large corporate tenants who began to capitalize on the low point in the market last year by signing new deals and early renewal transactions, locking in favorable rents rather than waiting for them to rise as the market continues to tighten.
In more recent months, the flurry of activity has led to increased competition for space among tenants, and Wells Fargo wasn’t the only company to be pushed aside. The law firm WilmerHale was knocked from negotiations to take about 200,000 s/f at the West Side office tower Worldwide Plaza earlier this year by the Japanese financial company Nomura, which appeared to receive preference because it is a significantly larger tenant. WilmerHale is now in negotiations to take roughly the same amount of space at the downtown office tower 7 World Trade Center.
The Hartford, an insurance company currently located at 2 Park Avenue, was also said to have been negotiating a possible lease at 120 Park Avenue in a deal that was also nixed by Bloomberg LP’s eventual transaction there.
Even Wells Fargo itself has appeared to have had to knock off competition at 150 East 42nd Street. A number of brokers say that the law firm Baker & McKenzie was considering space at the building, though the lease for its current office at 1114 Avenue of the Americas doesn’t expire for another two years. Baker may now go to 666 Fifth Avenue, another midtown tower with available space, these sources say.
Wells Fargo has a number of banking units, including wealth management, investment banking, and corporate banking in the city, many of them located at separate buildings. During the financial crisis in 2008, the company also acquired the near insolvent bank Wachovia, though that institution’s offices are not part of the consolidation sources say. Bringing a company’s facilities under one roof can make its operations more efficient and foster connectivity between the units real estate experts say.
Wells Fargo is said to be in talks to take the upper portion of 150 East 42nd Street. About 250,000 s/f is currently vacant at the top of the 42-story tower, which sits between Lexington and Third Avenue. Last year, the cable television network A&E TV almost signed a deal to relocate both it and its sister network Lifetime Television to that space from the Chelsea office building 111 Eighth Avenue, but reconsidered in favor of remaining in place at its current location.
The Japanese real estate investment firm Hiro Real Estate owns 150 East 42nd Street. A call to one of the company’s executives involved in managing the 1.6 million s/f tower, Dan Immordino, was not returned by press time. Jimmy Kuhn, president of the real estate services firm Newmark Knight Frank, was appointed asset manager of 150 East 42nd Street by Hiro and oversees leasing at the tower. Kuhn declined to comment. A brokerage team from the real estate services firm CB Richard Ellis comprised of company executives Scott Gottlieb, Edward Goldman, and Rocco Laginestra, handles leasing on behalf of 150 East 42nd Street’s owners. None were available for comment.
Wells Fargo is represented by Eastdil Secured, which is partially owned by Wells Fargo. Eastdil is primarily known as one of the city’s powerhouse investment sales and mortgage brokerages and rarely handles leasing deals. Because of the company’s relationship with Wells Fargo however, Eastdil’s chief executive Ben Lambert headed a company team to handle the search and negotiate the lease. Lambert couldn’t be reached for comment by press time. Media relations contacts at Wells Fargo also didn’t return calls about the potential deal by deadline.