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Turnaround at 132 W 31st St; engineers sublease 50,000 s/f.

Research and engineering company Scientific Application International Corporation subleased 50,000 s/f of space in 132 West 31st Street from former tenant HIP last week.

The deal, which is for the entire 6th floor and 8th floor in the building, absorbed the final portion of the roughly 130,000 s/f HIP had available for sublease since it vacated the building and relocated its offices to 55 Water Street nearly two years ago.

GVA Williams vice chairman Brian Givens repped HIP in the deal, the Staubach Company represented the tenant and Cushman & Wakefield brokers John Picco, Mitch Arkin, and Scott Vinett, who are the building's agents, approved the transaction for the its landlord, a partnership between C&K Properties and Zamir Equities. Asking rents for the space are in the high $20s psf and its term is good until 2011.

The deal is the largest in a series that stretches back over a year.

Marketing and technology firm 24/ 7 Real Media was the first to take up some of the sublease space, completing a 32,000 s/f deal for the entire ninth floor and part of the 16th at the end of 2004. Little more than a few months later, the Jewish Association for Services for the Aged, or JASA, an existing tenant whose lease for direct space on the 15th floor was set to expire, took advantage of the cheaper sublease space and moved its offices onto the tenth floor. Another existing tenant, printing and reproductions firm Merisel then expanded, subleasing the entire fifth floor. The 25,300 s/f deal bring the firm's total presence in the building to roughly 100,000 s/f.

The only vacancy that remains is the 25,300 s/f formerly occupied by JASA, space that is being actively marketed by the C&W team.

The recent deal marks something of a turnaround for the building, which C&K Properties had put up for sale only a few months ago. The firm wound up pulling the 17-story, 425K s/f building, for which it reportedly was seeking $120 million, off of the market instead and refinanced. The building generates an 8% cap rate according to Ben Korman, a principal at C&K Properties, far better than the 5%-6% rates comparable buildings are getting according to Korman's estimates.

"The building is stabilized and 31st Street is an excellent corridor that's getting even better," Korman said in a conversation with REW in August 2005. "We have companies like Vornado in the area doing a lot of great work, this is where we want to be."

With cash on hand from the building's recently completed refinance, C&K Properties has plans to upgrade the lobby and install a newsstand operator.

"Having tenants like the ones that were brought into the HIP sublease space helps raise the caliber of this building," Picco said. "It has been reinvented."

The decision to hold 132 West 31st Street breaks tempo with the C&K's recent busy pace of acquisitions and dispositions. In July 2005 the firm sold EAB Plaza, an elite Long Island class A office building it owned in partnership with Joe Moinian for $240 million. Then in August 2005, C&K grabbed attention again with its acquisition of Harry Macklowe's 410-unit residential rental building River Terrace for $365 million.
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Author:Geiger, Daniel
Publication:Real Estate Weekly
Date:Apr 5, 2006
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