NYU closed on a 1.1 million-square-foot masterlease at Vornado Realty Trust’s Greenwich Village office building.
The university made an upfront rent payment to Vornado of $935 million when the deal closed and will make annual payments of about $9.3 million during the 70-year lease term, the landlord announced.
The massive deal is the largest new lease since 2019, when WarnerMedia, formerly known as Time Warner, inked a deal for 1.5 million square feet in Related Companies and Oxford Properties Group’s 30 Hudson Yards, according to Colliers. The company owned the space as an office condo, sold it and leased it back from the landlord.
NYU has an option to purchase the office portion of the building at 770 Broadway both in 2055 and at the end of the lease. It will assume the existing office leases and rental income at the property.
Existing office tenants occupy about half the building. One tenant, Facebook parent Meta, downsized its office space in the building this year, when its lease for 275,000 square feet expired in June. The company still has 500,000 square feet in the building.
Vornado will keep the 92,000-square-foot retail condominium currently occupied by Wegmans, which inked a long-term lease in 2021 for the space formerly occupied by K-Mart in the building.
Completion of the lease brings the company’s entire office occupancy to 87.4 percent, Vornado’s Michael Franco said during the company’s earnings call. Vornado used a portion of the prepaid lease payment to repay the $700 million mortgage.
NYU owns more than 14 million square feet of space in the city, according to a TRD analysis in 2022. Much of that space is near its main Washington Square Campus in Greenwich Village. Last year, NYU purchased an office building at 400 Lafayette Street for $98 million.
This latest building addition, which is in the preliminary stages of planning and design, will be a hub for engineering, science and technology, the university announced. NYU will convert the vacant floors to laboratories, classrooms and workstations. It eventually plans to move some departments from rented space elsewhere as existing leases expire.
Kathryn Brenzel contributed reporting.
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