When a landlord acquires an office building with an agenda to demolish or change the asset, they will oftentimes preface all new transactions with a termination clause. Typically, this provision enables the landlord to cancel all existing leases by giving a specified and advanced notice to tenants. Although these caveats are atypical, they can become a major pain for tenants when exercised.
Below is a list of several Midtown office buildings where landlord’s require an ongoing termination clause.
317 Madison Avenue- 317 Madison is a part of SL Green’s massive assemblage, directly across the street from Grand Central Station. The REIT has major plans to demolish the existing buildings (between 42 and 43 Streets and from Madison to Vanderbilt) and construct a 1.2 million square foot office tower. Although this project will likely take years to plan and implement, SL Green keeps their flexibility by requiring a termination provision.
660 Madison- The southeast corner of East 61st Street is a prime location for a residential conversion. Directly across the street, Extell Development is already re-developing the Helmsley Carlton House Hotel into 68 uber-luxury apartments. Although Safra recently renovated the trophy office building, I am sure they will convert the building into residences if the NYC housing market remains on fire.
667 Madison- Often referred to as one of the best “boutique” buildings in NYC, 667 Madison is the same story as 660. Since real estate is utilized for its “highest and best use”, a condominium conversion in this neighborhood would only make sense if the residential market continues to perform. As a matter of fact, the building was originally developed for apartment users. Check out the advertisement from 1910!