The Chicago-based consulting firm The Greatest Good – which counts Freakonomics author Steven Levitt as one of its founders – recently signed a 10-year, 11,400-square-foot lease for the top floor of 510 Madison Avenue. The annual rent starts at $130 per square foot, according to The Real Deal, citing CompStak. The 35-story, 350,000-square-foot boutique trophy tower once sought Gold certification from USGBC under the LEED for Core and Shell rating system. But it appears to have dropped that effort (according to USGBC’s project directory) after Boston Properties acquired the tower from Harry Macklowe in 2010.
This isn’t the only recent deal at 510 Madison involving eye-popping asking rents. The investment firm Gruss Capital Management took the boutique trophy tower’s entire 16th floor in a similar 10-year, 11,500-square-foot transaction. It will pay nearly $100 per square foot, crossing $100 after five years. And over the summer, the Canada Pension Plan Investment Board (one of the world’s biggest pension plans) and 400 Capital Management each signed leases in the mid-$90s per square foot for spaces on the 15th floor and 17th floors, respectively (again, according to CompStak).
510 Madison Avenue, of course, has had much success over the past few years in attracting high-end, financial services sector tenants on the strength of its tenant-focused technologies and amenities, advanced building systems, and prime Plaza District location (along with stable new ownership). All of those bells and whistles supported its original LEED-CS aspirations. More recently, Boston Properties also closed several smaller deals for prebuilt spaces at 510 Madison in a trend we noted here at gbNYC+ across several high-profile, trophy office buildings, including 7 World Trade Center and the Empire State Building.
But deals like The Greatest Good’s at triple-digit asking rents continue to demonstrate the demand for high-end, technologically-advanced Class A office space in New York City. They portend well for other boutique office buildings that are state-of-the-art (like 51 Astor Place). LEED- or other third-party certification may be the icing on the cake for prospective tenants, but if 510 Madison Avenue is any indication it is traditional real estate market fundamentals – location, amenities, and availabilities – that will continue driving these sorts of deals, in green buildings or otherwise.