BXP is close to securing its first major tenant at its 343 Madison Avenue office development in Manhattan. C.V. Starr, a global insurance and investment firm, has agreed to lease about one-third of the 1-million-square-foot tower, according to a report from the Wall Street Journal. Specific terms of the agreement have not been made public, and neither BXP nor C.V. Starr have commented on the reported deal.
C.V. Starr previously renewed a lease for about 140,000 square feet at 399 Park Avenue in 2016 and later expanded by an additional 71,000 square feet. Both buildings are owned by BXP, which was formerly known as Boston Properties.
The 46-story development at 343 Madison Avenue is directly connected to Grand Central Terminal. It is unusual for such a large office project to begin construction without significant pre-leasing commitments. As of last month, BXP reportedly had a letter of intent with a tenant to occupy 30 percent of the building’s leasable space, believed to be C.V. Starr.
The project has faced financial challenges. Last month, BXP reduced its dividend by 30 percent in order to help fund the $2 billion construction cost, aiming to save $50 million each quarter. The development site was previously the headquarters of the Metropolitan Transportation Authority. This summer, Norges Bank withdrew from a planned 45 percent partnership in the project.
Following Norges Bank’s exit, BXP has been seeking a new partner to take on up to half the development costs. CEO Owen Thomas has said that such a partnership could help secure a $1 billion construction loan and potentially reduce BXP’s costs to $500 million. The company is also considering raising $1 billion by selling land and suburban office properties as it prepares to finance the project without a partner.
— Holden Walter-Warner
