Pacific Oak Strategic Opportunity REIT, Inc. recently announced that it had secured a new office lease in downtown Manhattan at 110 Williams St. The tenant — a New York City agency — has signed on for 640,000 square feet, which it will occupy in phases under a lease that spans 20 years.

A Newmark team led by Hal Stein and Daniel Appel represented the property owner, while Robert Giglio of Cushman & Wakefield and Ellen Israel of JRT Realty Group worked on behalf of the tenant in the lease negotiations.

Pacific Oak initially acquired the property together with KBS Capital Advisors in 2014 with plans to renovate it into class A downtown Manhattan office space. The joint venture took out a $265 million loan from Morgan Stanley in March 2017, which was then refinanced two years later with a $349 million, floating-rate loan issued by Invesco.

The 32-story tower — located on the northeast corner of William and John streets — incorporates roughly 928,000 square feet of Financial District office space. Notably, it’s not the first time that it has housed an NYC agency: The New York City Economic Development Corporation previously occupied nearly one-third of the space before it relocated to One Liberty Plaza in 2016. Similarly, the New York City Housing Development Corporation moved to nearby 120 Broadway in 2022.

While the news release did not specify which agency signed the office lease this time, the tenant was said to be an agency that provides a critical service throughout the city.

The deal brings 110 Williams St. to 100% occupancy and is touted to be the largest New York City office lease of the year to date. According to Bisnow reporting, recent Securities and Exchange Commission filings by Pacific Oak revealed that the undisclosed tenant would pay $44 per square foot and that the rate would increase $4 per square foot every five years. The lease also offers the tenant an option to extend by two additional five-year terms.

The filing also detailed that the NYC agency would occupy the space 200,000 square feet at a time, with relocation expected to be complete by 2025. Upon reaching full occupancy of the leased space, the tenant will pay roughly $28 million per year in rent.

“This is an excellent outcome that further enhances the durability of the REIT’s income and net asset value,” said Peter McMillan, president of Pacific Oak Strategic Opportunity REIT, Inc. “Deals like this are reflective of the long-term commitment to office space that remains in one of the world’s premier markets. We continue to be optimistic about opportunities we see to create value for our shareholders.”

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