BXP is close to securing its first major tenant for its office development at 343 Madison Avenue in Manhattan. According to a report from the Wall Street Journal, C.V. Starr, a global insurance and investment firm, has agreed to lease about one-third of the 1-million-square-foot building. The specific terms of the lease have not been made public, and neither BXP nor C.V. Starr have commented on the deal.
C.V. Starr has a history with BXP, having previously renewed and expanded its lease at 399 Park Avenue, another property owned by BXP, which was formerly known as Boston Properties.
The 343 Madison project is notable because BXP began construction on the 46-story tower, which will have direct connections to Grand Central Terminal, without having secured significant pre-leasing commitments—an uncommon move for developments of this scale.
Reports indicate that BXP had a letter of intent with a tenant for about 30 percent of the building’s leasable space as of last month, likely referring to C.V. Starr.
Financial challenges have impacted the project. Last month, BXP reduced its dividend by 30 percent in an effort to help finance the $2 billion tower and is seeking $50 million in quarterly savings. Earlier this year, Norges Bank withdrew from a plan to take a 45 percent stake in the development, prompting BXP to search for another partner willing to share up to half of the project’s cost.
Owen Thomas, CEO of BXP, stated that bringing in a new partner could enable the company to secure a $1 billion construction loan and reduce its own costs to $500 million. In addition, BXP is considering raising $1 billion through sales of land and suburban office properties as it prepares for the possibility of financing the project without a partner.
