IBM recently signed a 16-year lease to anchor SL Green’s One Madison Ave. — a 1.4-million-square-foot office tower in the Flatiron District — in what has become the largest lease deal for a New York City office space so far this year. The Armonk, N.Y.-based tech company will occupy 328,000 square feet in the yet-to-be-completed building. The lease covers portions of the ground floor, along with floors two and seven, as well as the entirety of floors eight through 10.
Notably, the deal included different asking rates for the various spaces. For instance, the asking rent for floors two through nine was $115 per square foot, whereas it was $160 per square foot for the tenth floor. The tenant was represented by Patrick Murphy, Josh Kuriloff and Winston Schromm of Cushman & Wakefield. Paul Glickman, Alex Chudnoff, Diana Biasotti and Ben Bass of JLL represented the landlord.
“We’re extremely proud to welcome IBM to One Madison Avenue,” said Andrew Mathias, president of SL Green. “IBM is an ideal anchor tenant for One Madison, which was designed for exactly this kind of forward-thinking office user.”
“Our new downtown hub will create a modern and dynamic experience for our employees, our clients and our ecosystem partners,” said Joanne Wright, IBM’s vice president of enterprise operations and services. “We see New York as an extraordinary center of talent and innovation, and we are confident our new home at One Madison will help attract the kind of talent we need to keep IBM at the vanguard of innovation.”
IBM has been looking for a suitable location to consolidate several of its existing Manhattan offices, including 590 Madison Ave. and 51 Astor Place. The company’s footprint at One Madison will be smaller than the combined square footage of its older office spaces, but it will benefit from a host of amenities that will be added during the development, which is being led by Kohn Pedersen Fox Associates and is expected to be completed in November 2023.
In 2005, SL Green paid MetLife $918 million for One Madison Avenue and later announced it would construct a new glass tower above the existing 900,000-square-foot limestone structure. Once completed, the tower will feature a DOAS HVAC system to circulate fresh outside air; a 13,000-square-foot, full-service restaurant; a 10,000-square-foot artisanal food market; a 7,000-square-foot, tenant-only, club-style lounge; and a 5,000-square-foot shared tenant roof deck. Additionally, IBM will also have a client center to showcase its artificial intelligence and hybrid cloud technologies.
One Madison Ave.’s occupancy rate currently stands at roughly 30% after Chelsea Piers Fitness also signed a 20-year lease for 56,000 square feet at the building some five months earlier. According to CommercialEdge data for January, Manhattan’s office vacancy hit 12.8%, with the Gramercy Park submarket (which includes the Flatiron District where the One Madison development is unfolding) close to the metro’s average at 12.4%.
