Complexities highlight 555 Madison Ave. deal.

Red Pine Advisors, a financial advisory firm, has signed a nearly 6,000 s/f deal to relocate to 555 Madison Avenue from Third Avenue.

The company, which says on its Web site that it provides advisory services for "esoteric and illiquid financial investments"--what may be particularly valuable specialties amid the credit crunch and the fire sales going on now for the opaque asset backed securities that sparked it--will occupy the building's entire 25th floor.

Red Pine will take the space as a sub-sublease, a lease structured with a subtenant in what was a complex deal that a broker involved in the transaction said required layers of consent.

The financial firm Friedman, Billings, Ramsey Group, Inc., known as FBR, had initially leased the space from the building's landlord, the Coates family, but subleased it to a pharmaceutical firm in recent years called Innovive after deciding at the time move to a building that was able to provide it with more room to expand.

Over the summer Innovive was acquired by the Los Angeles based biopharmaceutical company CytRx. Ramsey Feher, a vice president at CB Richard Ellis who represented CytRx, said that the company pulled Innovive's operations to the west coast and decided to sublease the space for the remaining three-year term left before its expiration.

Shortly after, however, a late summer cataclysm unfolded in the financial system, the economy plunged into the depths of a serious recession that has been especially pronounced in the city where the financial industry is based and Manhattan office leasing activity has ground to a near standstill.

CytRx faced the additional hurdle that any deal it arranged for the space would have to go through a tedious and potentially time consuming approval process. Landlord consent is necessary in order for a tenant to sublease space and, in the case of sub-subleases, consent is also required from the subtenant, in this case FBR.

Feher estimated the timeframe for the deal could have taken three months.

"Typically you have thirty days to negotiate a lease and then a thirty day process from the consent group and then another thirty days from the landlord," he said.

Red Pine however set a much tighter deadline because it had to vacate 900 Third Avenue.

During the boom days in the Manhattan leasing market a year and half ago when tenants lined up for space and rents appeared to be climbing ceaselessly higher, it would have been hard for a subtenant to convince a landlord and perhaps even the tenant it was subleasing from to fast track its deal.

Hastened by the dreary market, the various parties managed to get the lease done within a month, an indication of the relatively newfound leverage tenants can now wield in lease proceedings given the depressed pace of deals.

"We were able to get a sub-sublease done from term sheet to consent in just under thirty days; it's one of the faster deals I've ever been involved in," Feher said. "We were able to get everyone on the same page, almost miraculously so."

Part of the landlord's motivation is that it didn't want the cheap sublease space competing against other openings in the building that it wants to lease directly.

Asking rents for Red Pine's deal were in the $80s psf, but a person familiar with the lease said it will pay a rate far less expensive, probably somewhere in the $60s psf, which is about enough so that CytRx can break even.

While a three-year term may have hampered the space's attractiveness when the market was hotter because it would mean that any taker of the space would have to worry about their leasing situation all over again after only a short time, near-term expirations have become attractive because they allow tenants to meet their immediate space needs without tying themselves down when the prevailing opinion is that rental rates will continue to fall.

Tenants are also eager to see how the economic problems will affect their businesses before making long-term real estate decisions.

Cushman & Wakefield represented the landlord in the deal and First Service Williams represented Red Pine.