We recently completed a transaction on behalf of our client, Delcath Systems, to relocate from a sublease at 1301 Avenue of the Americas to a new sublease at 1633 Broadway. When we first met Delcath, we only had five months to find them space before their current sublease expired and they would have to holdover (which based on their existing sublease agreement, would have been costly.) I was introduced to them by my colleague and partner on this transaction, Brett Shannon. This is the second time Brett and I have worked together on tenant rep deals and I appreciate his confidence in me as a partner on this transaction.
After a phone conversation with Barbra Keck, Senior Vice President, Finance, about their needs, we prepared a survey of relocation alternatives and determined that a new sublease at the Graybar Building (420 Lexington Avenue) was something we should see right away. With speed being of upmost importance, we ended up submitting proposals for that sublease and within 10 days, were at final terms. There’s an old saying in real estate that “time kills all deals” and unfortunately that is what proceeded to happen here. Despite getting to final terms quickly, the sublandlord (Crawford & Company) took a very long time accepting our term sheet and agreeing to draft sublease documents. After two weeks of no update – with our term sheet ready to go pending approval from Crawdord’s executive team – we got a call from Crawford’s brokers that their client was taking the sublease off the market for a few months. We could not afford to wait and therefore were back to the drawing board.
With now only four months to find Delcath new space, we prepared another survey of alternatives and toured four buildings including 1633 Broadway, where there was a 6,877 sq. ft. sublease from Kasowitz Benson on the 22nd floor, and a 6,661 sq. ft. prebuilt direct space at 60 East 42nd Street. Delcath and its board had thought that a short-term lease was best based on their current business objectives and 1633 Broadway provided the flexibility of a 3 year term. Though the space at 60 East 42nd Street was cheaper on a rent per sq. ft. basis, 1633 Broadway was fully furnished and wired. When we ran a financial analysis comparing the two options, 1633 Broadway was actually less expensive than 60 East 42nd Street on an all-in basis and was the space preferred by Delcath – a win-win.
We ended up agreeing to terms and completing a quick and painless sublease transaction at 1633 Broadway. We were able to negotiate a short-term sublease for Delcath (what they wanted) with rights to extend the length of their sublease at a later date – a great result for a client that needed our help to act quickly.