Insurer leases 250,000 s/f.

AIG has leased 250,000 s/f at Financial Square in what was the last large lease of 2006, a catalyzing year for downtown.

The insurance firm, which occupies close to 4 million square feet in Lower Manhattan, will take floors 6, 19-22, 27 and 28 for rents that begin in the mid $40s per s/f and climb into the $50s per s/f over the life of the long-term deal.

Arthur L. Bocchi of Paramount, along with Frank Cento and Larry Tannenbaum of Cushman & Wakefield, represented the landlord in the lease negotiations. Lewis Miller, Andrew Sussman, John Powers and Scott Sloves of CB Richard Ellis represented AIG.

The lease absorbs most of the vacancy in the 36-story, 1 million s/f building. Although sections of the space are clustered together, institutional tenants such as AIG typically prefer their floors to be entirely contiguous when committing to large deals. But with the way that the downtown market has tightened in the last year, large space users haven't been able to be nearly so choosy.

Permeating the downtown market at the beginning of 2006 was a sense of worry over the large amount of vacant space in Lower Manhattan, concern that seemed to heighten as the soaring midtown market rose to the point where a record gap in rental rates emerged between the two districts. Perhaps nothing better exemplified the district than 7 World Trade Center, whose leasing success many considered a litmus test for the long-term prospects of the district and the need for the millions of squaree feet of new office space planned at the WTC site.

Although the building began the year virtually vacant and with no leasing prospects in sight, 7 WTC soon attracted a number of tenants who leased well over half its 1.7 million s/f of space. The string of deals mirrored the dramatic level of market-wide leasing activity that, in the space of just 12 months, absorbed most of downtown's lingering large blocks and created a stir in the brokerage community that downtown may be teetering--like midtown before it--on the verge of a space shortage.