Vornado makes room on 7th for investment managers.

Investment management firm, GSC Group, has expanded its offices in Manhattan, leasing the 26th and 27th floors at 888 Seventh Avenue for rents around $90 per s/f. The firm will be relocating from Tower 49 where it currently has 7,000 s/f on the 32nd floor, far less than the 39,600 s/f it will be occupying at 888 Seventh Avenue.

According to sources, the company needed the space to accommodate its growing operations.

"Over the last two years, GSC has doubled in size, in terms of assets under management and number of employees," an October 4 statement posted on the company's website read. GSC Group changed its name at the start of the month from GSC Partners in a repositioning meant to highlight its growth as well as the recent reorganization of its business and management structures.

The firm, which has a real estate arm that invests in REITs, is said to have a strong relationship with Vornado, 888 Seventh Avenue's landlord, and hence negotiated its deal without a broker.

Leases in which tenants deal directly with a landlord in a transaction are not typical in Manhattan, where a broker's ability to find space amid a tightening market and negotiate better leasing terms for a tenant typically makes them an essential middleman in most deals.

Vornado terminated two leases to free the floors for GSC, with whom it will net far higher rents than the space's previous tenants who had signed their leases years ago. Although average rents in midtown were higher during the dot-com boom in the late 90s and in 2000, a record volume of deals are currently being done for rents above $70 per s/f, what is considered a gateway rate above which rents are counted within the city's highest pricing brackets for office space

The Hearst Corporation was the previous tenant on the 27th floor. Computer Associates occupied 26.

GSC's exodus from Tower 49 will free up a rare block of space in the nearly fully leased building. One of the only other openings is a 6,000 s/f sublease being handled by CB Richard Ellis for Credit Suisse, who is asking for $85 per s/f in rent.