http://www.nytimes.com/2007/06/13/re...in&oref=slogin
Near the U.N., a Run on Office Space
The Diplomat Center.
Torben Gettermann, the Danish consul general, renewed Denmark’s lease early.
By J. ALEX TARQUINIO
June 13, 2007
The United Nations has been wrestling with how to renovate its headquarters in New York for nearly a decade. The creaky Secretariat and General Assembly buildings, perched along the East River in Midtown Manhattan, have not been refurbished since they were completed in 1952. Even the original mechanical and engineering systems are still in place.
The really tricky part was deciding where to house the United Nations while a renovation project was being completed. There was even some talk of picking up stakes and temporarily moving the United Nations to either Brooklyn or Queens.
But in December, the General Assembly approved a $1.9 billion plan that will keep it in Manhattan for the duration of this project. Only about 1,000 of the 3,500 employees will have to move out of the main complex, and most of them will be in temporary offices nearby. Werner Schmidt, a United Nations spokesman for the renovation project, said that work could begin early next year and should be completed by 2015.
The United Nations itself is not the only entity investing heavily in this neighborhood. The diplomatic offices of some governments — as well as nongovernmental organizations, or N.G.O.’s, working with the world body — have started renewing their leases early or are buying or renovating office space nearby.
The countries involved range from small island nations to the United States, which is completely rebuilding its permanent mission directly opposite the United Nations.
Although many diplomats now scoff at the notion that moving to Brooklyn or Queens was ever a serious option, they say the approval of the renovation plans, known as the Capital Master Plan, has given them confidence to make their own real estate plans.
“The government of Angola prefers to purchase real estate in those capitals where we are going to be for a long time, and we hope the United Nations is going to be in this location for many, many years,” said Ismael Gaspar Martins, Angola’s ambassador to the United Nations.
Angola’s permanent mission to the United Nations is now housed in a brownstone that it has owned on Manhattan’s Upper East Side since the 1970s. But Mr. Martins said the building, on East 73rd Street between Lexington and Park Avenues, is rather far from the United Nations.
So Angola recently purchased the entire 12th floor of the building at 820 Second Avenue, at 44th Street. It is renovating the space, which totals more than 11,500 square feet, and Mr. Martins said he hoped that the employees would be able to move in before the next General Assembly session in the fall.
The building, which is just steps away from the United Nations, is also known as Diplomat Center because so many governments maintain their permanent missions to the United Nations there.
Philips International, a New York developer, bought roughly 70 percent of the office space in this 19-story building and all of the retail space for $48 million last year. The rest of the building had already been sold as office condominiums to a number of buyers, including the governments of Croatia, Nepal, Syria and Peru.
Some other governments have leased space in the building for years. Andrew Aberham, vice president for sales and leasing at Philips International, said that all the tenants would be allowed to renew their leases if they chose not to buy their space. He also said that Philips planned to retain all of the retail space, covering almost 12,000 square feet, and to renovate the lobby.
The republic of Madagascar, which had a little less than a year left on its lease, opted to buy its office two weeks ago. Madagascar purchased nearly 7,000 square feet, or a little more than half of the eighth floor. The government of Nicaragua rents the other half.
Philips is asking about $675 a square foot for the office condominiums. “I think that is typical for the market now, because we’ve been selling close to that number,” Mr. Aberham said.
Some governments that prefer to rent near the United Nations are taking the unusual step of renewing their leases years before they expire in order to lock in prices, even though this means paying higher rents sooner rather than later.
They are primarily motivated by soaring rents. The average rent for office space east of Third Avenue from 35th to 61st Streets, jumped more than 27 percent in the last 12 months, to about $68 a square foot, according to CB Richard Ellis.
So in April, the government of Denmark renewed its lease about a year and a half early at 1 Dag Hammarskjold Plaza, which is at 885 Second Avenue at 47th Street. “I thought if we renewed early we would be able to secure a more reasonable rate,” said Torben A. Gettermann, the Danish consul general in New York.
Denmark’s offices occupy all of the 18th floor and about half of the 17th floor, and include both the mission to the United Nations and the Royal Danish Consulate General.
Many consulates in New York are along Fifth Avenue, but Mr. Gettermann said that it made sense to share space near the United Nations because “we have a tremendous traffic of people from Denmark — politicians, N.G.O.’s and anyone interested in the United Nations — who all pass through our offices.”
The republic of Ireland leases the entire 19th floor of 1 Dag Hammarskjold Plaza. The Irish mission to the United Nations was something of a trendsetter when it renewed its lease for the space, which is roughly 16,000 square feet, two years early in 2005. It secured a 13-year lease, which is relatively long in Manhattan, where landlords usually prefer to sign 10-year leases, said Matthew McBride, a broker at CB Richard Ellis, who represented the Irish mission in the lease negotiations.
Sean McDonald, Ireland’s deputy permanent representative to the United Nations, said the Irish government felt fortunate to have renewed its lease right before the big spike in rents.
“If you looked at what was happening with the Capital Master Plan at that time, it seemed pretty certain that there was no question of moving out of town,” Mr. McDonald said. “I don’t think it was ever realistic to think that we were moving to Brooklyn.”