August 10, 2022

In a monumental Manhattan upheaval, IBM is relocating its thousands of Big Apple employees from ten different addresses into one – namely, to One Madison Avenue. The 328,000 square-foot lease was signed just hours ago on Monday and appears to be the largest new lease in the city so far this year.

 The 1.4 million-square-foot One Madison is a redevelopment of SL Green, which is adding a new, glass-wrapped tower on top of the 19th Century limestone-façade original at the corner of East 23rd Street across from Madison Square Park. Construction is to wrap by November, 2023.

The Post called the project a risky, “$2.3 billion speculative plunge” by the developer in December 2020, when the city’s commercial world was shut down and no one knew what the future might hold.

As One Madison Avenue’s anchor tenant, IBM will occupy parts of floors two and seven, the entire eighth through tenth floors and a portion of the ground floor, where it will have its own lobby entrance. 

IBM wanted a single address to consolidate its multiple locations in Manhattan.

IBM was long prowling for a single address to consolidate its scattered Manhattan operations, including at 590 Madison Ave. and 51 Astor Place. The new digs will have fewer square feet than the combined older ones, reflecting the efficiencies that result from reorganization into a single workplace geared to 21st Century needs. 

 The tech giant’s global headquarters will remain in Armonk, NY.

Although the Grand Central area is Manhattan’s most in-demand office market right now, the SL Green-IBM talks in Midtown South started before the pandemic, according to SL Green leasing head Steven Durels.

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“They took a pause during Covid-19,” Durels said. “Once IBM decided on their new real estate requirements, they re-engaged us.”

IBM and SL Greene began negotiating prior to the pandemic.

Durels said that SL Green CEO Marc Holliday and IBM CEO Arvind Krishna “met face to face once there was a clear consensus that One Madison had everything the company wanted to bring its employees back to the office,” Durels said.

The deal “says everything about what big tenants want in the post-Covid world,” Durels said. They include a DOAS HVAC system to circulate 100 percent fresh outside air; a Chelsea Piers Fitness center; oversized new windows in the podium-level floors; and, in the case of IBM, a 34,000 square-foot outdoor terrace on the tenth floor. The No. 6 subway station below provides direct access to mass transit.

IBM vice-president of enterprise operations and services Joanne Wright said the new location “will create a modern and dynamic experience for our employees, our clients and our ecosystem partners” and “help to attract the kind of talent we need to keep IBM at the vanguard of innovation.”

SL Green Leasing Head Steve Durels says the deal represents everything big tenants want in a post covid world.

Lease terms were not released. Sources speculated that they were in the triple-digits per square foot range, consistent with the current market for premium space, but it couldn’t be confirmed.

The IBM deal and the recently-signed Chelsea Piers Fitness retail lease for 56,000 square feet still leave the bulk of the project’s 1.4 million square feet available. But Durels said advanced talks are ongoing for much of that.

IBM was represented by Cushman & Wakefield’s Patrick Murphy, Josh Kuriloff and Winston Schromm. Jones Lang LaSalle’s Paul Glickman, Alex Chudnoff, Diana Biasotti and Ben Bass acted for SL Green.  

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