The “flight to quality” does not mean that office tenants in today’s tough market invariably gravitate to brand new towers.
The phenomenon includes the demand for properties built in the old 20th century that are “new” thanks to hundreds of millions of dollars of reinvestment.
Vornado Realty Trust has spent $450 million to redesign and reposition the once outdated office tower that is now known as PENN 1 on Seventh Avenue between West 31st and 33rd Streets.
The transformation of the vintage 1970s 2.5 million square foot property has steadily paid off in new office leases.
Now, according to neighborhood sources, the building has signed its largest financial services lease since redevelopment began.
We are told that Canaccord Genuity Group has signed for 75,000 square feet over two floors.
Our brokerage pals said the asking rent was $103 per square foot, a huge jump from the $60 Vornado was asking just two years ago.
Canaccord, which through subsidiaries specializes in wealth management and capital markets investments, will move from 535 Madison Ave. and 33 Whitehall St. next year, we are told.
The agreement brings PENN new, renewal and expansion leases from 1 to 800,000 square feet over the past two years.
The most recent office lease prior to Canaccord was 36,000 square feet for a Samsung unit. Other major tenants are Dell, Empire Heath, Cisco, Hartford Insurance, Jacobs Engineering, Morgan Stanley and Wells Fargo.
About 370,000 square feet remain available, according to online databases.
In addition to new triple-glazed windows, upgrades to PENN 1 include more than 160,000 square feet of “WorkLife” amenities on the first three floors. Among them is a new wellness center called Life Time which we recently reported on.
There’s also The Landing full-service restaurant and 100,000 square feet of flexible workspace and conference rooms. A new satellite of Roberta from the Brooklyn original has also signed a lease for a small Vornado building attached to PENN 1.
PENN 1 is half of a two-building “campus” with an upgraded PENN 2, due to open by the end of the year.
The properties also feature upgraded entrances to the subways and Penn Station. They are part of Vornado’s $2 billion overall upgrades to its Penn-area buildings.