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JLL Chairman Peter Riguardi: Spotify's 4 WTC Deal Is Just The Beginning

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After a surging start to 2017, Manhattan's office market is showing how much pent-up demand there is after an uncertain, tense 2016.

JLL Tri-State chairman Peter Riguardi from 2010

Spotify's 387k SF deal at 4 World Trade Center — which could be as large as 463k SF, if it picks up its expansion options — is just the latest lease of 200k SF or more in the first six weeks of the year.

Already, News Corp. and 21st Century Fox signed deals for 1.2M SF at 1211 Sixth Ave. in Midtown; the New York Attorney General's office committed to 345k SF at 28 Liberty in Lower Manhattan; Tommy Hilfiger signed to take 200k SF in RFR's 285 Madison Ave.; The Royal Bank of Canada re-upped for 400k SF at Brookfield Place; and now Spotify is more than doubling its NYC footprint. 

JLL Tri-State chairman Peter Riguardi, along with colleagues Alex Chudnoff, Ken Siegel and Jim Wenk, represented Spotify, which is occupying 140k SF at 620 Sixth Ave. JLL also repped Fosun Property Group to sign the AG's office and is repping BlackRock for its planned move to 850k SF at 50 Hudson Yards; the deal is still just under a letter of intent, not a formally signed lease. And the firm is not done yet.

"We have a couple more big deals that should happen in the first quarter," Riguardi said. "We were hoping some of these deals might have happened at the end of 2016, and they took a little longer to finish up. I think it had a little bit to do with the election and uncertainty with the economy."

CBRE's Evan Haskell and John Nugent

Riguardi said it is not necessarily President Donald Trump's electoral victory that is fueling the activity; politics aside, businesses just wanted the certainty of who is going to be in the executive office before making a big leasing decision.

The team on the other side of the Spotify deal — CBRE's Mary Ann Tighe, David Caperna, Steve Eynon, Adam Foster, Evan Haskell, Rob Hill, Ken Meyerson and Stephen Siegel, along with Silverstein director of World Trade Center leasing Jeremy Moss — sees the same landscape.

"There’s other pending transactions that started in ’16 that are getting toward the finish line," Haskell, a senior vice president, said. "You’ll see in the next couple of months a lot of those deals getting done."

Do not be surprised if more of them happen downtown. 4 WTC is now full, but 3 WTC still has 1.8M SF available, and there is more supply coming. While the tech firms opening offices in the city had previously flocked to Midtown South and old, prewar buildings around Chelsea and Union Square, Spotify ditched the old for the new.

It could signal a trend; Spotify was growing so fast, and so large, that "there were not many alternatives," Riguardi said. Moss said since the Spotify deal broke in the news late last year, 3 WTC has seen much more interest.

"Lower Manhattan had been attracting tech, but Midtown South was where the growth started," Moss said. "Now Lower Manhattan is going to quickly surpass that. We’re closer to where a lot of the workforce comes from. We have a neighborhood that’s got more and more great places to eat, shop and hang out, and we have the space to accommodate the growth that these companies need."

It also needed to move fast — part of the deal included Spotify employees moving into the building's pre-built offices now while its 11-floor spread is built out for 2019.

The speed was so critical, the deal all came together "soup to nuts, in four or five months," Haskell said, faster than other deals of this size he has worked on. Part of what helped close the deal was the Oculus transportation hub and subterranean mall at the WTC, which opened soon before the negotiations began.

"When we took Spotify’s team downtown and walked them through the Oculus, through the connection to Brookfield and the other way to Fulton Station," Riguardi said, "they were really, really impressed."