After launching construction on a prominent office development without a tenant publicly in place, BXP appears to have found its first taker at 343 Madison Avenue.
Global insurance and investment firm C.V. Starr is in agreement to lease roughly a third of the 1-million-square-foot development. Further details of the deal were not disclosed and the companies have not commented on the alleged deal, first reported in the Wall Street Journal.
The insurance firm previously renewed roughly 140,000 square feet at 399 Park Avenue in 2016 and expanded by another 71,000 square feet. That office building is also owned by BXP, previously known as Boston Properties.
The development site at 343 Madison is a prominent Manhattan project, as BXP is building its 46-story tower with connections to Grand Central Terminal. Still, it’s rare for projects of this size to commence without a large amount of the space pre-leased.
BXP reportedly had a letter of intent in place with a tenant to take 30 percent of the building’s leasable square footage as of early last month; presumably, C.V. Starr is that tenant.
The development of 343 Madison has already been fraught with financial challenges. Last month, BXP lowered its dividend by 30 percent to help pay for the $2 billion office tower, searching for $50 million in savings on a quarterly basis.
The development site of the Metropolitan Transportation Authority’s former headquarters suffered a blow this summer when Norges Bank backed out of a plan to be a 45 percent partner in the project.Â
Since then, BXP has been searching for a partner to pick up as much as half of the development cost, which CEO Owen Thomas has said would help land a $1 billion construction loan. The CEO said that BXP’s costs could drop to $500 million under that scenario.
The company is also looking to raise $1 billion by selling land and office properties in suburban locations, preparing to finance its project without a partner.
— Holden Walter-Warner
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