Australian financial-services company Macquarie Group signed the first lease at a new Midtown Manhattan redevelopment of the office tower that gained global attention during the Trump administration because it was owned at the time by the family of senior Trump aide Jared Kushner.
The 39-story building, which has changed its name from 666 Fifth Ave. to 660 Fifth Ave., is being overhauled in a $400 million redevelopment by Brookfield Asset Management which purchased a long-term lease of the property from the Kushners in 2018. Macquarie is leasing 220,000 of the building’s 1.25 million square feet of office lease for its Americas regional headquarters, now located at another Midtown building a few blocks away.
The deal represents a milestone for Brookfield, which launched its leasing program during one of the most challenging office markets in recent memory. The pandemic has reduced demand and increased sublease space as businesses throughout the world shift to hybrid strategies that allow employees to work from home part of the week.
Fortunately for 660 Fifth, most of the leasing activity has focused on well-located modern buildings with great views and state-of-the-art amenities and air filtration systems. As anchor tenant, Macquarie will be getting 30,000 square feet of private outdoor terraces, a private lobby and entrance and top-of-the-building signage rights.
Brookfield is recladding the facade of the tower with 11-foot-by-19-foot window frames for maximum light and air. Macquarie’s interior design consists of multifloor atriums that give its space the “feel like you’re within a building that’s inside another building,” said Mikael Nahmias, a Brookfield senior vice president.
Tenants want highly amenitized space to lure their workers back to offices in the current tight labor market. “We’re not necessarily competing with one building versus another,” Mr. Nahmias said. “It’s like we’re competing with someone’s kitchen counter.”
Mr. Nahmias declined to discuss financial terms of the lease. But people familiar with the Manhattan leasing market say Macquarie’s blended rent for its six floors of space is over $100 a square foot.
Macquarie has shifted to a hybrid workplace strategy in the past year. The space it is leasing at 660 Fifth Ave. is roughly equal to the amount of space it is giving up in its existing offices, people familiar with the leasing market said.
Originally built in the late 1950s as 666 Fifth Ave., the tower was purchased in 2007 for a then-record price of $1.8 billion by the Kushner family shortly before the global financial crisis hit. When the economy collapsed, the building’s occupancy and rents plummeted. Soon it stopped generating enough cash to pay debt service, forcing the Kushners to reach into their pockets to keep the building from defaulting.
Political controversy added to financial woes after Mr. Trump was elected president in 2016 and named Jared Kushner, his son-in-law, a top White House aide. Critics of the Trump administration contended there were potential conflicts of interest when news broke that the Kushners were negotiating a possible bailout of 666 Fifth with Anbang Insurance Group Co., which had close political and family ties to the Chinese government.
The Kushners and Trump administration denied a conflict existed. They pointed to steps that Mr. Kushner had taken to protect against potential conflicts, like selling his stake in 666 Fifth to other family members.
The talks with Anbang eventually broke down. In 2018, Brookfield purchased a 99-year lease of the tower in a deal that valued it at $1.29 billion. That price didn’t include the $400 million cost of the redevelopment, which is expected to be completed later this year.
Mr. Nahmias said that 660 Fifth has numerous other leasing deals in the pipeline. He predicted it will be fully leased “if not by the end of the year then very soon afterwards.”
Write to Peter Grant at [email protected]
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