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City agency renews lease for 450,000 s/f.

The Administration for Children's Services has renewed its 450,000 s/f of space at 150 William Street for rents in the $20s per s/f. Peter Hennessy, New York area president of Staubach, repped the city agency, which occupies 18 of the building's 19 floors.

ACS will pay $9 million per year for the first five years of its new lease, whose 15-year term begins in 2008. The agency will then pay $11 million for the five years after that and its rent will increase by a million dollars per year for the last five years of its lease.

Hennessy has helped Staubach, which only represents tenants and not land-lords, cultivate a busy practice handling the real estate needs of government agencies and is said to be working on a handful of large deals with other city tenants.

One such tenant, the New York City Office of the Comptroller, nearly had completed a roughly 250,000 s/f lease arranged by Hennessy at 199 Water Street when it was bumped by Aon in July. The space was being offered as a sublease by Wachovia. The Office of the Comptroller has since renewed its search and there were rumors during the summer that it would go to 100 Church Street, one of the last buildings downtown with a large block of vacancy.

The deal with the ACS could do something to assuage concerns among some downtown landlords that the millions of square feet of development planned for the World Trade Center site will have a deleterious effect on the Lower Manhattan office market.

The Port Authority and the city have pledged to fill hundreds of thousands of square feet of the new office space with federal, state, and city government agencies; tenants who would otherwise have taken space in downtown's existing--and less expensive--office buildings.

Some may even be relocating from existing space downtown to the WTC site, creating vacancy in their wake, but ACS's commitment demonstrates that the fears of a concerted migration among government tenants to the new office towers being developed by Silverstein Properties and the Port Authority is unlikely to play out.
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Author:Geiger, Daniel
Publication:Real Estate Weekly
Date:Nov 8, 2006
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