100,000 s/f lease at 1095 6th 'close'.

The stock trading company Instinet is close to signing a roughly 100,000 s/f lease at 1095 Avenue of the Americas. Sources familiar with the deal say the company, which produces systems and software for institutions to trade equities, will take over the building's three lowermost office floors, floors three, four and five, for rents that start at about $70 per square foot.

The firm will relocate from 3 Times Square, the headquarters of its former parent company, Reuters, where its lease expires in 2011.

The space at 1095 comes at a large discount to what it rented for at the end of 2007, when the real estate financing and asset management company Centerline Capital Holdings signed a long term deal for the floors that began at $125 per square foot and rose into the $140s per square foot in incremental increases. Since then, rents have plummeted as the recession has battered tenants and pushed up vacancy around the city.

Real estate financing companies like Centerline have been hit hard by the downturn as the loans they hold on their books have become vulnerable to the rise in mortgage defaults and new business has slowed to a trickle because of a dearth in new sales transactions.

After reporting dismal earnings in recent quarters, including a $328.47 million loss in the first quarter of this year, Centerline terminated its lease at 1095 Avenue of the Americas because it was either unable or unwilling to pay the building's rates.

According to a source familiar with Centerline's leasing situation, the firm will keep its current offices at 625 Madison Avenue, a roughly 80,000 s/f space that it had planned to relocate from to 1095 Avenue of the Americas.

Instinct, meanwhile, will inherit the trappings of Centerline's capital investment in the space. According to a broker who has toured the floors recently, Centerline had installed brand new offices at a cost of about $150 per square foot to construct, what adds up to about $15 million.

On top of receiving that existing buildout, Instinct was granted a period of free rent and money to pay for any further construction work needed to modify the space for its occupancy from the building's landlord, The Blackstone Group.

One broker who didn't have details of the deal but is familiar with the market for high end space in midtown, said that a concession package for Instinet likely included as much as a year in free rent and between $50 and $60 per square foot for work towards the company's buildout.

The telecom giant, Verizon, sold 1095 Avenue of the Americas, at the corner of Sixth Avenue and 42nd Street, to the office REIT Equity Office Properties in 2005. Seeing an opportunity to create an office building that would rival the quality of a newly-constructed tower at a fraction of the cost, Equity undertook a sweeping renovation of the 41-story tower.

The firm began cladding the building in a new facade of green tinted glass and replaced many of the building's core amenities and mechanical systems, such as its lobby, elevators and heating and ventilation systems.

The private equity firm, The Blackstone Group purchased Equity Office Properties in early 2007 in a landmark $36 billion deal and completed the work, leasing the building to a collection of deep-pocketed tenants at aggressive rates.

The building, consequently, has appeared to be at the forefront of the faltering office market, iStar Financial, another real estate financing company, suffered heavy losses as the credit crunch began to brew in 2007 and decided to sublease over 100,000 s/f it had taken higher in the tower. The firm has so far been unable to find any takers.

A leasing team from CB Richard Ellis represents The Blackstone Group but was unavailable for comment. Merrill Roth, a broker with the real estate services firm Newmark Knight Frank, represents Instinct. He said that he was unable to comment.

Mark Dowd, a corporate communications executive at Instinct, would only say that the company had not yet signed a deal for a new office space.

Calls to Centerline were not returned by press time.