Newmark signs e-STEEL at 1250 Broadway

Real Estate Weekly, Jan 12, 2000

In a significant expansion of its rapidly growing Internet business, e-STEEL Corporation, an online exchange for the global steel industry, has signed a series of coterminous leases for a total of 51,574 square feet of office space at 1250 Broadway. The leases comprise the 21st, 22nd, 30th and 31st floors of the 39-story office tower located between 31st and 32nd streets in Midtown South.

Paul Davidson, senior managing director, and Ken Abelson, director at Newmark & Company Real Estate, Inc., represented the tenant in the transactions. Steven Durels, senior vice president of leasing for SL Green, handled the negotiations for the landlord, SL Green Realty Corp.

"When we started the process of finding space for e-STEEL back in the Spring, they had a requirement of barely 10,000 square feet," said Davidson. "But, as is typical of Internet firms, they grew unexpectedly, at such a rapid rate, that their requirements doubled several times during the course of our lease negotiations."

In June of 1999, Newmark negotiated a sublease of the 31st floor at 1250 Broadway from ABT, which at the time had possession of both the 30th and 31st floors but only occupied the 31st. During negotiations with ABT, e-STEEL's business began to grow and the firm realized they needed more space. At that point, Newmark negotiated directly with the new owner of the property, SL Green, for the entire 22nd floor, which represented the last of the vacant space in the building.

"As part of the terms of the deal with SL Green for the 22nd floor, e-STEEL had to also commit to taking the entire 21st floor when the current tenant's lease expired in October2000," explained Davidson. "Based on the current success and projected growth of e-STEEL, it was a mutually beneficial deal for both landlord and tenant, and we did not hesitate. In fact, the current tenant has agreed to vacate the space in advance of their lease expiration and e-STEEL will take possession of the 21st floor in February of 2000."

With three floors secured in the building, which was now 100 percent accounted for, e-STEEL wanted more. "Knowing that ABT was evaluating its need for space in New York, we worked with SL Green to convince them to release ABT from their lease and sign a direct lease with e-STEEL for the 30th floor," continued Davidson. "We had to work fast and emphasize the strength of e-STEEL to secure the space, since there were several other tenants already vying for the floor. In fact, we agreed to take the 30th floor sight unseen in order to lock in a lease ahead of another tenant."

"Our staff is expanding rapidly due to the immense success of our web site," said Todd Miceli, CEO of e-Steel. "Planning for space needs in this business is very difficult because it is hard to anticipate how quickly your business concept will catch on. We never expected our space requirement to grow so large in the course of only six months, and we are grateful to Newmark for doing such a good job of keeping up with us. We are also pleased to work with an entrepreneurial landlord such as SL Green, who had the foresight and flexibility to accommodate our phenomenal growth."