State agencies swallow up 460,000 s/f at 60 Broad.

After briefly considering a move to 95 Wall Street, three state agencies renewed their leases at 60 Broad Street in a 460,000 s/f deal last week that could pave the way for their eventual relocation to the Freedom Tower.

The Office of Court Administration, Division of Housing and Community Renewal, and the New York State Department of Insurance agreed to a 10-year term with the option to terminate their lease in five years, an exit that would coincide with the Freedom Tower's scheduled completion.

Staubach New York area president Peter Hennessey represented the tenants. Cogswell Realty, a minority stakeholder in the building, handles leasing for 60 Broad's majority owner, Wells Real Estate Funds.

The deal's shorter term reflects the way in which the Office of General Services, the state agency that handles government leasing, is trying to align tenants' lease expirations with the opening of the Freedom Tower, where it has a mandate to fill 400,000 s/f.

A slightly larger 520,000 s/f deal was potentially in the works at 95 Wall Street, but was precluded because the landlord, The Moinian Group, was hesitant to agree to such an unusually short term. OGS may opt however to keep the three state agencies in their space rather than relocate them to the Freedom Tower.

OGS is said to be reserving far more tenants than it needs for the new tower, which it was charged with leasing to state government agencies by former Governor George Pataki in order to create the kind of guaranteed commitments that would make the soaring 2.6 million s/f building financially feasible.

By having a pool of tenants who may relocate but aren't formerly slated to take space in the Freedom Tower, OGS hopes to improve its bargaining position in deals outside the, iconic new building. This way, if a landlord, downtown or elsewhere, won't negotiate better terms, the tenant can opt to move to the Freedom Tower, or at least use that option as leverage to negotiate a better deal.