NEW YORK (Reuters) - BlackRock Inc BLK.N will initially pay about $60 per square foot in rent for its future headquarters in the Hudson Yards district on the far west side of midtown Manhattan, the company said in a filing on Thursday.
BlackRock, which oversees $5.4 trillion in assets and is the world’s largest asset manager, is moving into 847,000 square feet (78,690 sq meters) of a development that will be part of a neighborhood rising over rail yards and tracks in a once-forlorn corner of New York City.
The company said in the filing with the U.S. Securities and Exchange Commission that it will pay $50.8 million per year in the first five years, and an increasing amount after that, for a total $1.25 billion over 20 years.
That works out to about $60 per square foot to start, and nearly $74 over the full term of the lease for the offices at 50 Hudson Yards. The company also will be responsible for its operating expenses at the building and a share of property taxes, which will add about $30 a square foot to the lease, a source with knowledge of the transaction said.
The lease is one of the largest ever in Manhattan in terms of size and value of the overall contract.
The average asking rent in April for midtown Manhattan office space was $84.09 a square foot, according to Cushman & Wakefield. Along Park Avenue, near where BlackRock is currently located, asking rents averaged $91.13 a square foot.
High-end “trophy” properties, such as 50 Hudson Yards, often rent at higher rates than average. The developing district has also attracted Coach Inc COH.N, Wells Fargo Securities and the National Hockey League.
The success of the Hudson Yards district has already moved the center of Manhattan’s office complex from BlackRock’s current location, in the coveted Plaza District in midtown, south and westward to the new development.
The BlackRock lease was agreed on Wednesday and starts May 1, 2023.
For the time being, BlackRock has offices in two buildings on 52nd Street off Park Avenue, along with other locations.
Its new building, which is expected to be finished in 2022 and be the city’s fourth-largest office tower, will include 15 floors of a 58-story tower developed by Related Cos LP and Oxford Properties Group Inc. It also includes a 400-seat auditorium.
BlackRock received a $25 million tax credit from New York state as part of the move on the condition the company creates 700 new jobs and retains staffing in the city of about 2,700 for a decade.
Reporting by Trevor Hunnicutt; Editing by Tom Brown