CBS vacates majority of its office space at Black Rock tower  

CBS vacates majority of its office space at Black Rock tower 

 

 By Ellen Cans

Black Rock, the landmarked Midtown Manhattan trophy tower, has been working to fill the space vacated by media giant CBS, as reported by Crain’s NY.   Moody’s bond-rating firm has warned that the famed 36-story tower saw its occupancy rate slip to 70%, after CBS’s move last month.

Located at 51 W. 52nd St., Black Rock, built in 1963 and landmarked by the city in 1997, offers 880,000 square-feet of commercial space.  It is the only skyscraper designed by Eero Saarinen, the renowned architect behind the TWA terminal at John F. Kennedy International Airport and the Gateway Arch in St. Louis, MO.  The tower had served as former headquarters of CBS, symbolizing broadcast television’s might.  In November, CBS vacated more than 130,000 square feet of space at the tower. The network is also planning to move out of its remaining 53,000 square feet of space by November 2024.  Per Crain’s, Paramount Global, which owns CBS, sold Black Rock to private real estate investment firm, Harbor Group International, in Aug. 2021 for $760 million, and relocated its headquarters to the 54-story office building at 1515 Broadway.

 

Per Crain’s, other leases at the building may also be expiring.  In 2026, law firm Orrick Herrington & Sutcliffe will see their lease for 213,000 square feet expire, giving them the option to leave, per DBRS Morningstar. Also, law firm Dorsey & Whitney’s lease for 70,000 square feet for space expires in 2026.

 

A Harbor Group spokesman commented, saying the Black Rock building is 78% occupied after the CBS move-out, and that the other tenants have not given any hint that they would leave.  Company rep Sid Bridge said that Harbor Group has signed 79,000 square feet worth of new leases, including moving its own NY headquarters to the property.  He added that some 41% of the building is either a new lease or has been renewed, though terms of the new leases won’t allow them to publicize the tenant names.  A spokesman for Harbor Group added the new tenants will pay rents close to $100 per square foot. He also shared that Black Rock’s second-largest tenant, law firm Wachtell Lipton Rosen & Katz, has decided to extend its massive 250,000 square foot lease, which was set to expire in 2024.  The law firm said it will stay and extend the lease by five years.  “New leasing is going better than we expected,” said Jim Vallos, Harbor Group Managing Director.

Per Crain’s, the building’s net cash flow dropped 11 percent in the year ending Sept. 30, falling to $31.8 million, per Moody’s data.   Based on Moody’s calculation, Black Rock is only making 71% of the cash needed to service its mortgage. Next October, the building’s $420 million loan matures and the owner “may have difficulty to refinance or exercise its built-in extension options,” Moody’s said. A Harbor Group rep said that the original loan actually offers three extensions, which are good till 2027.

In 2021, weighted average rents at the building were around $75.77 per square foot, which was below the area average of $89.26, as per DBRS. Harbor Group spent $128 million renovating the building, and transformed half of the 12,000 square-foot lobby into a lounge called Club 53, in a bid to attract higher-paying tenants.  The company is nearing completion of a significant capital improvement program to offer first class amenities for tenants.  “With this repositioning, we will create a space that seamlessly blends the building’s storied past with modern aesthetics and functionality,” said Richard Litton Jr., President of HGI.