Flagstar’s Decision to Retain Signature’s 300K-sf Broadway Space is a Big Win for ESRT
The recent announcement by the Empire State Realty Trust (ESRT) delivered good news for Manhattan’s office market while abating concerns of over 300,000 square feet potentially being introduced to the market at a time when office space vacancy is at a high. The 313,109 square feet currently under a lease to Signature Bank at ESRT’s 1400 Broadway will be assumed by Flagstar Bank, N.A., which acquired a large portion of the bank’s assets following the takeover by regulators. The lease that extends through 2039 will remain under the same terms, However, the modified deal includes a 1.5% rent reduction over the duration of the lease as a result of a $3 per square foot rent reduction for the first 5-years of the lease amendment of the nearly $59 per square foot paid by Signature, or about $275,000 less per year than the $18.2 million in annual rent. The agreement will enable ESRT to reverse $5.8 million of a $6.4 million straight-line reserve set aside last quarter to account for a potential vacancy in the Signature space.