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Re: New York Times - Quandary for Office Tenants: Downtown Manhattan or Downtown Jersey City
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Deutsche Bank Signs Major Expansion at Mack-Cali's Harborside

Financial Services Powerhouse Inks 228K-Square-Foot Lease on Jersey City Waterfront

Deutsche Bank AG, the global investment bank headquartered in Frankfurt, Germany, signed a 228,193-square-foot office lease with Mack-Cali Realty Corp. (NYSE:CLI) at Harborside Financial Center's Plaza One, on the Jersey City waterfront.

Under the 10-year, six-month lease, the bank agreed to renew an existing 90,000-square-foot block of space and and expand into another 138,193 square feet.

The long-term deal follows a short-term commitment Deutsche Bank signed at Harborside in April 2004. That deal for 90,000 square feet was set to expire at the end of this year.

The lease brings the 400,000-square- foot, Class A office building to just under 80% leased, according to Mack-Cali. The building was originally built in 1928 and renovated in 1986. Amenities include a 16,000-square-foot atrium, a convenience store, on-site management and a restaurant.

David Maurer-Hollaender and a team of brokers from CB Richard Ellis represented Deutsche Bank. Mack-Cali handled negotiations in-house.

Posted on: 2006/8/24 14:23
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New York Times - Quandary for Office Tenants: Downtown Manhattan or Downtown Jersey City
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The developer Larry A. Silverstein has been betting that tenants for the new office towers at ground zero will finally come knocking on his doors when space gets tight in Midtown and rents soar to unprecedented levels.

Indeed, after largely ignoring his newly built skyscraper at 7 World Trade Center for two years, tenants like Moody’s Investors Service; Mansueto Ventures, a business magazine publisher; and Darby & Darby, a law firm, have suddenly started leasing space there that would bring hundreds of workers downtown.

But leasing is also getting hot again one mile to the west, in Jersey City, where a forest of office towers grew up on the waterfront in the 1990’s as companies fled the higher costs of Manhattan.

Citigroup, which announced two years ago that it was moving 1,600 workers to western New Jersey from downtown, just signed a lease that would send another 1,200 high-paying executives from Lower Manhattan to the Newport complex in Jersey City. Deutsche Bank is nearing completion of a deal to move 1,200 workers to the Harborside complex in Jersey City from Manhattan.

Until recently, the percentage of vacant offices in Jersey City languished in the double digits, refusing to budge. So most developers scurried to erect condominium towers. But after word of Citigroup’s possible move to Jersey City first surfaced three months ago, the level of interest in the New Jersey waterfront by New York-based companies has jumped to the point where the developer Richard Lefrak is considering building his eighth office tower in Jersey City, at a site now earmarked for residential development.

“There’s a lot of activity on the waterfront,” said Mitchell E. Hersh, chief executive of Mack-Cali Realty, which owns the Harborside complex and is negotiating with Deutsche Bank. “Rents here are roughly half of what they are in Midtown. We’re seeing a lot of interest, corporate expansions as well as financial services.”

The moves by Citigroup and Deutsche Bank are only the latest illustrations of the difficulty of retaining jobs in New York City and rebuilding the business district in Lower Manhattan. Increasingly since the Sept. 11 terrorist attacks, financial institutions and other companies have sought to decentralize. And with rents rising again in Manhattan, there is an economic incentive to relocate at least technical jobs to less-expensive places.

In the past, the battle for jobs has often led to border wars, as New Jersey offered sizable subsidies to lure companies across the Hudson and New York countered with tax breaks of its own to keep the companies in place. Many economists condemned the strategy as self-defeating for both sides.

Eric J. Deutsch, president of the Alliance for Downtown New York, a business group, said that demand was still growing downtown, especially since rents in some prime Midtown buildings have climbed above $100 per square foot a year. In the last 18 months, he said, companies from outside Lower Manhattan have leased 1.5 million square feet of space downtown. In addition, Royal Bank of Canada, the AIG insurance company and Legg Mason, the brokerage firm, are all about to sign leases for some of the large blocks of downtown space.

To retain jobs and handle growth, he said, there is a need for more new buildings. “While the New Jersey waterfront will always be a lower-cost alternative,” Mr. Deutsch added, “Lower Manhattan is the ideal location and a better value for tenants who want to be in New York City.”

There are four new towers planned for ground zero, with 8.8 million square feet of space, and they face a lot of competition from New Jersey, which offers even larger tax breaks and other subsidies than a tenant can get downtown.

The lure of lower costs and tax breaks can be enticing, even to a company like Citigroup, whose chief executive, Charles Prince, is co-chairman of the Partnership for New York City, a civic group working to entice companies downtown.

After Citigroup announced in 2004 that it was sending 1,600 workers from Lower Manhattan to Warren, N.J., a spokeswoman vowed: “We’re keeping all our space in Lower Manhattan. We’re not giving up an inch of space.”

But now the bank has sold its building at 250 West Street and is moving the executives who worked there to Jersey City.

The average rent downtown may be $38.57 a square foot per year, 35 percent cheaper than the Midtown average, according to CB Richard Ellis, a real estate broker. But the average on the Jersey waterfront is only $28.87 a square foot. And under New Jersey’s Business Employment Incentive Program, Citigroup will get a tax rebate worth an estimated $37.1 million over 10 years and Deutsche Bank will get one worth about $22 million over the same time period.

Shannon Bell, a spokeswoman for Citigroup, said yesterday that the bank remained the largest private employer in New York City. “We expect to continue to add jobs here and to keep our headquarters here,” she said.

Kathryn Wylde, president of the Partnership for New York City, said that another border war would be unwise.

“What’s important to New York is that these jobs remain within our regional economy,” she said. “We’re long past days where New Jersey is the enemy. It’s more important that these jobs don’t move to Maryland, Tampa or India.”

http://www.nytimes.com/2006/08/11/nyr ... 1towers.html?ref=nyregion

Posted on: 2006/8/11 13:03
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