Euro bank expands at Jersey City tower.

BNP Paribas will be expanding its offices in Jersey City, where the European bank relocated much of its operations at the beginning of the year from Midtown in the face of sharply rising rental rates.

As part of that deal, the bank had leased 110,000 s/f in 525 Washington Boulevard and now will add another floor, the fifth, which will boost its presence by 33,000 s/f.

Real estate experts have taken BNP Paribas' commitment to Jersey City as an example of the growing readiness among office tenants either unable or unwilling to pay the growing cost for Manhattan office space to relocate to the cheaper markets that ring the city.

Asking rents in the 36-story, waterfront tower begin in the mid $30s per s/f, although rents for both the deal in January and the recent expansion likely got done in the low $30s per s/f. In either case, they're bargain rate compared to the rent BNP Paribas would have had to pay to renew its offices at the high-end Midtown tower, 787 Seventh Avenue, where it had space that it would likely have cost $100 per s/f or above to renew.

With rents less than a third of Midtown's priciest office districts and below the rates for office stock of commensurate quality in Lower Manhattan, Jersey City has become an increasingly popular alternative. Roughly a year ago, Citibank took 317,000 s/f at Newport Office Center 7, a building owned by the Lefrak family and net-leased to UBS. Deutsche Bank and Merrill Lynch also expanded their offices in the area in recent months The district has historically been a popular location in which tenants have relocated back office functions, but given the rent rises in Manhattan is now a place where tenants, like BNP Paribas, are shifting their entire operations.

Last November, the financial services firm E*TRADE Financial, shed 60,000 s/f of office space that it had occupied in Manhattan and expanded its offices at Harborside Plaza 2 where it now occupies 110,000 s/f for which it pays rents in the $20s per s/f.

Cushman & Wakefield brokers John Cefaly and Augustus Field represent BNP Paribas. C&W also is the agent for the building, which is owned by Brookfield Properties. Brookfield took control of 525 Washington Boulevard last year after it acquired the property's former owner Trizec, whose assets it divvied with its partner in the acquisition, The Blackstone Group.