New York’s growth as a center for life science research was underscored with the Icahn School of Medicine at Mount Sinai signing a 30-plus-year medical office lease in Manhattan with The Georgetown Company.
The deal: The school agreed to a 165,000-square-foot lease in March 2021 across three floors at 787 11th Ave. on Manhattan’s far west side. The building, on historic Auto Row and originally opened in 1929 as the Packard Motors Building, has been turned into a mixed-use redevelopment designed by Rafael Viñoly Architects after Georgetown’s 2015 purchase of the property in partnership with billionaire investor Bill Ackman’s Pershing Square Capital Management. Other notable investors include actor and former politician Arnold Schwarzenegger, NBA star LeBron James and music producer Jimmy Iovine.
Why it matters: The lease, near Mount Sinai West’s full-service medical center at 1000 10th Ave., reflects not only the continued makeover of the area that was known for its car dealerships and warehouses. It also showcases New York’s growing role as a life science hub. The lease was one of the largest office deals signed in Manhattan during the pandemic and, according to Georgetown, larger than the total life science square footage leased across New York in 2020.
The brokers: Rob Martin, JLL vice chairman, and Barbara Winter, JLL executive managing director, represented the tenant.
What they’re saying: COVID-19, while presenting challenges, also offered opportunities that ended up sealing the deal. JLL had first approached Georgetown about space in the building about five years ago but was turned down, Winter said. The second time was the charm. When the brokers reached out again in the second quarter of 2020 — when the pandemic upended the office market — the feeling was mutual.
But with COVID-19 creating a cloud of uncertainty, leading hospitals at the time to pause many elective surgeries and nonessential services, Mount Sinai wanted to be more conservative budget-wise. Pulling off the deal required employing all the tools Winter said she has learned in her 35-year career as a broker.
One way Martin and Winter helped lower the cost was to have the transaction structured as a leasehold condominium that allows nonprofit groups such as Mount Sinai to benefit from a property tax exemption. They also worked with Georgetown to obtain third-party financing of tenant improvements that they said was several times the typical amount, and at a low interest rate.
Mount Sinai in the end was able to get the 165,000-square-foot space in a “below-market economic deal,” the brokers said.
“What was unusual is it combines so many innovative financial structures in one deal,” Winter told CoStar News.
To accommodate Mount Sinai’s wet lab and other uses, the JLL team also worked with the landlord to develop a special infrastructure setup that’s needed for life sciences tenants.
Room to grow: The life science sector in New York, backed by government resources as well as venture capital funding, is poised for further growth. By 2026, 2.5 million square feet of life science space is forecast to deliver in the greater New York area, according to a 2021 JLL report, adding there was an existing lab inventory of 2.3 million square feet.
CoStar’s Impact Awards highlight the commercial real estate transactions and projects that have transformed their markets over the past year. The winners are chosen by independent panels of industry professionals who work in the markets they judge. A list of judges can be found here and the criteria for selecting winners can be found here.