U.S. Customs signs long-term lease at Starrett Lehigh building

Real Estate Weekly, Feb 5, 2003

Grubb & Ellis Company, one of the leading providers of integrated real estate services, announced that working closely with the United States Customs Service ("USCS") and the General Services Administration ("GSA"), it has arranged a long-term lease of 266,327 SF at 601 West 26th St., the Starrett-Lehigh Building, for the USCS.

The United States Customs Service is the primary enforcement agency protecting the Nation's borders. It is the only border agency with an extensive air, land, and marine interdiction force and with an investigative component supported by its own intelligence branch.

USCS in New York was formerly located at 6 World Trade Center, the building that had been immediately adjacent to the Twin Towers. On 9/11, USCS lost its building. Because USCS had a prior relationship with two Grubb & Ellis professionals from its Los Angeles office -- Chris Sinfield, senior vice president, and Rammy Rasmussen, vice president -- it instantly initiated emergency contact. In view of the enhanced importance of USCS' role in the post-9/11 environment, it needed new space as a national priority. Dan Gronich, chairman of Grubb & Ellis New York, and Robert Yaffa, an executive managing director, immediately assembled their team, and by 1 p.m. on 9/11, the team was in contact with USCS regarding its needs. On Thursday 9/13, USCS flew in specialists from its other offices and joined GSA for Grubb & Ellis-conducted tours of available space in Manhattan.

One challenge was to relocate USCS' regional leadership. Speed was vital, as Manhattan's limited inventory of suitable and vacant space in move-in condition was in great demand by a host of other space-losers, including New York State and such corporations as American Express, the Bank of New York and Lehman Brothers.

By Monday 9/17, USCS had selected One Penn Plaza and Grubb & Ellis -- working around the clock -- had negotiated and closed what became USCS' 140,569-SF long-term lease.

"The second and perhaps even more important challenge, relocating the USCS Enforcement Division into substantial and secure new quarters, became an incredibly complex and creative deal," said Gronich. "Early on, we were passed through the police checkpoints protecting the devastated Downtown area so we could jointly examine possible new offices: but we discovered that nothing that suited USCS' needs was available Downtown -- or could be available for quite some time. We sought fully-built space on a very substantial floor plate in a secure building with easy access to the bridges, tunnels and highways, and most importantly with enclosed and secure parking, itself a rarity in Manhattan," he noted.

USCS felt that its best option was the huge Starrett-Lehigh Building, which has floor plates of 150,000 SF -- among the largest in the city -- and a private enclosed parking garage.

"Insufficient space for UCSC was then available in that 2.3 million-SF building, which had other tenants such as WilTel Communications and SmartMoney Magazine, a joint venture of Dow Jones & Company and Hearst Corporation," Yaffa reported. "But our nation's need to get USCS up and running was critical. We discovered 53,000 SF of mostly built and furnished space that had been abandoned by a dot.com and was suitable for immediate occupancy as temporary quarters for USCS. The U.S. Attorney's office and the Department of Justice became involved and within days had condemned the temporary space and the entire garage. In this way, although cramped, USCS was able to swiftly resume its operations and keep its personnel in Manhattan."

From the point of condemnation, noted Gronich, "We spearheaded negotiations to get all the parties aligned in a way that would undo the condemnation and allow the closing of the long term lease being announced today. To accomplish this, one of the many challenges we faced was to negotiate for the surrender of spaces on long-term leases by the above-mentioned WilTel and SmartMoney. Ten different parties had to be satisfied at exactly the same moment: this finally took place at the closing, in November 2002, in front of a Federal Court judge for New York's Southern District."

According to Yaffa, "As a result of our negotiations, the landlord will invest millions of dollars in building security upgrades that will benefit USCS and the many other tenants in this building. USCS expects to move into its newly built-out space this September."