Advertising giant eyes 800,000 s/f at 200 Fifth.

Communications giant, WPP, is eyeing a massive lease at 200 Fifth Avenue in which to consolidate its Manhattan operations, including the hundreds of thousands of square feet that its subsidiary advertising firm, Ogilvy & Mather, currently occupies at 825 Eighth Avenue "It's one of their options," said Robert Lapidus, a principal at L&L Acquisitions, the Manhattan-based real estate investment firm that recently purchased 200 Fifth Avenue for $500 million.

Lapidus confirmed that WPP has expressed interest in leasing most if not all of the 800,000 s/f building, but declined to comment on whether negotiations between the two have begun or if a deal was already in the works.

In its search for 700,000 to 1 million s/f of Manhattan office space, WPP has taken a few u-turns amid a market where shrinking vacancy rates have left it with a slim selection of available large blocks of space from which to choose.

Ogilvy & Mather's lease at 825 Eighth Avenue is scheduled to run out in 2009. But despite the pressure that the looming expiration has put on the timeline of its move, WPP was rumored to have passed up a deal last year in Hudson Square with Trinity Real Estate, which owns numerous buildings in the neighborhood with discount rents and huge tracts of vacancy. Instead, WPP has been eager to remain in Midtown, even though the district's rents have climbed to levels well beyond the bargain rates the company is said to be seeking. Recent rumors linked the firm to the Lord & Taylor building at 424 Fifth Avenue. NRDC, a partnership between Apollo Real Estate Advisors and National Realty & Development Corporation, purchased Lord & Taylor last year for $1.2 billion in cash and has been searching ever since for a more profitable alternative to the ailing department store at the Fifth Avenue building.

The rumored deal raised questions over just how radically WPP was deviating from the original parameters of its search. Because significant alterations to 424 Fifth Avenue's interior would be needed to convert its retail space into desirable Midtown offices, brokers speculate that the property's landlord will likely have to charge rents in the $75 to $80 per square foot range to make a conversion economically feasible.

Lapidus indicated that L&L Acquisitions would likely seek similar rates for the space at 200 Fifth Avenue.

Yet, while such rents are significantly higher than the sub $50 per square foot rents that WPP had originally seemed to be seeking, virtually no other location in Midtown would be able to offer as much space at a commensurate price. WPP would likely have to fork over triple figure rates, for instance, to become an anchor tenant in any one of the handful of proposed office developments around the city that are seeking significant tenant commitments before breaking ground.

The Related Companies, Vornado, Brookfield Properties, Boston Properties, and SJP Properties all have brand new office towers either in the planning stages or in development on the West Side of Manhattan, where tracts of vacant land and antiquated buildings have made such construction possible. Situated on 23rd Street, 200 Fifth Avenue could become part of the class A enclave of buildings that border Madison Square Park. Right now that cluster sits mainly on the park's eastern fringe in a corridor of towers that stands out among the surrounding Flatiron District's collection of decidedly more grungy and antiquated office buildings.

Such a description may have fit 200 Fifth Avenue in the past when its space served as offices and showrooms for the hundreds of tenants that comprised the city's Toy Industry.

But L&L Acquisitions has plans to turn the property into a class A office building, parting with a recent plan that the previous owner, real estate investor Joe Chetrit, had to turn the building into luxury condominiums.