New York City’s Health System Lands $758M Lease

By Holly Dutton

100 Pearl Street rendering

The country’s largest public health care system has signed on for 525,552 square feet of office space at 50 Water Street in the Financial District of New York City, where it will consolidate several administrative offices into one campus.

NYC Health + Hospitals inked a 25-year, $758 million lease agreement with building owners GFP Real Estate and Northwind Group that will reduce the agency’s office footprint by 20 percent and reduce its real estate rental costs by $16.5 million in five years and by $203.1 million over the life of the lease. The health care agency will occupy 14 floors of the 29-story building.

“By eliminating the inefficiencies of having staff in multiple sites, we will reduce travel time and expenses, strengthen the work environment, and build a stronger operation to provide better support to our frontline staff throughout the five boroughs,” said Dr. Mitchell Katz, president & CEO of NYC Health + Hospitals, in prepared remarks.  

A Newmark Knight Frank team of Brian Waterman, executive vice chairman, and Ira Rovitz, senior managing director, brokered the transaction.

NEW TENANT, NEW ADDRESS

The public health system will be the first major tenant to occupy the former Guardian Life Building, which is in the process of a $250 million repositioning  from the former 7 Hanover Square into two new office addresses: 50 Water Street, at the base, and 100 Pearl Street, in the tower. Each address will have its own separate entrance. 

Once renovations are completed, 50 Water Street and 100 Pearl Street, designed by S9 Architects and Tuller McNellus Feld, will feature ground floor retail with a block-long food hall component, and two penthouse office spaces, both of which include expansive terraces. The lobby at 100 Pearl Street will offer amenities like a coffee and wine bar, seating for casual meetings and an adjacent restaurant and bar.

“We are excited to share our vision for 50 Water Street and 100 Pearl Street with the market,” said Eric Gural, co-CEO of GFP, in prepared remarks. “We believe that creating two distinct office buildings, with separate entrances and identities, gives us an opportunity to satisfy very different market demands.”

GFP and Northwind acquired the former 7 Hanover from Guardian Life in December 2017. The joint venture partnered up previously to acquire and reposition another Financial District asset, 40 Exchange Place, which the JV refinanced last May with a $100 million loan from Capital One Bank.

Image courtesy of GFP