330 Madison Avenue

Even the experts don't have an easy time finding new office space.

After a lengthy search, one of the city's largest commercial brokerages is trading spaces in midtown. Jones Lang LaSalle is taking two floors in Vornado's 330 Madison Avenue, occupying 82,000 square feet in the base of the recently renovated tower, according to Real Estate Weekly. Vornado, run by kingpin Steve Roth, has spent upward of $100 million transforming the aging glass box into a cutting-edge, LEED-rated "green" office building.

Jones Lang LaSalle is leaving one of Mort Zuckerman's trophies, the Boston Properties-owned Citigroup Center, which has been re-branded as 601 Lexington. Real Estate Weekly calls the move yet another victory for Roth:

In 2008, Cushman & Wakefield, another large leasing and real estate services company, relocated its global headquarters from 51 West 52nd Street into about 175,000 square feet at 1290 Avenue of the Americas. Vornado, one of the city's biggest landlords, also owns 1290, making two of the city's largest brokerage companies its tenants, a fact that sources say the company will wear as a feather in its cap because brokerage companies are considered smart and sophisticated tenants and especially savvy choosers of space.

The weekly also surmises that this is an expansion for Jones Lang LaSalle, which has been ascending in the city in recent years under local CEO Peter Riguardi. One of its new neighbors is not doing so well, however. SAC Capital also just inked a deal for the 21st and 35th floors in the tower. The firm, and its notorious founder Steven A. Cohen, are currently embroiled in the major insider trading scandal.

A Midwestern law firm is putting down roots at 601 Lex.

Robins, Kaplan, Miller & Ciresi, which had a temporary floor at 499 Park Avenue, has signed a seven-year sublease for its first New York office at the former Citigroup Center (stripped of that name in 2008 following the bank's fall from grace and $45 billion government handout).

The firm has taken 28,866 square feet, the entire 34^th floor, subleasing from Kirkland and Ellis, which has a number of floors in the Boston Properties' building. The new lease significantly expands the firm's New York office space with 250 lawyers in six locations nationwide, as it continues to grow. Speaking of recession-era shamings, Robins, Kaplan absorbed a number of lawyers from law firm Dreir LLP after the named partner was sentenced to 20 years in prison for fraud.

The move was prompted, quite simply, because "they had brought in a number of attorneys and they were out of space," said Frederick Kane Marek of The Vortex Group, who repped the tenant. Asking rents on Lexington Avenue are in the mid-$40s.

lkusisto@observer.com

As senior vice president and regional manager of Boston Properties’ New York office, Robert Selsam oversees one of the largest collections of trophy assets in Midtown. The company’s portfolio includes some of the city’s most exclusive office towers, such as the GM Building, 510 Madison Avenue, 399 Park Avenue and 601 Lexington Avenue. Though Midtown leasing was down substantially in the first quarter from last year, Mr. Selsam says that the company’s own leasing figures bucked the trend, in part because its assets are desirable enough to attract takers even during hiccups in the market.

Robert Selsam.

The Commercial Observer: It’s been a bit slow in Midtown this past quarter with negative absorption to the tune of over two million square feet. Is it tough to be a landlord in Midtown right now?
Mr. Selsam: You know, it’s easy to draw the wrong conclusions from spot data from one quarter. I’ll give you an example why. It could be that a lot of deals happen to get done before the new year. That’s one reason. It could be that there are quirks in the way availability is calculated.
As we sit here today let’s say there is a big tenant with one million square feet expiring a year from now. All the brokers know that the space is available but it hasn’t hit the stats yet. So a month later, it hits the availability and it look like there was negative absorption of one million square feet. You have to look through the numbers. Now, it was a slow quarter for most people. I’m happy to say that our first quarter was above last year’s.

Last year was one of the busiest first quarters in quite some time. How were you able to do better this year?
Demand is really strongest, strange as it seems, for high-quality, smaller spaces in newer buildings. So we’ve been very busy at assets like 510 Madison. We like to have a variety of products available in a given building so no one gets turned away, but beyond that, we do a lot of business with small financial services firms who don’t want to take time to design and build space. They really want ready-to-move-in offices, so we find that by pre-building space we get deals done and get rents started sooner.

While it definitely seems like there are smaller deals getting signed, one conspicuous hole in leasing activity has been among larger tenants. What do you make of the slowdown in the market for big deals?
Given the size of the Midtown market there will always be large tenants whose leases expire in two to four years and it takes them that long to find new space and get the lease done and the planning and figure out how they can get in by their expiration date or negotiate a short-term renewal with the landlord. They’re always out there and they have options. If they’re looking for new modern building, those are pretty scarce and nothing is going to change that for several years. For that reason we’re very optimistic about 250 West 55th Street, which we are building now and will top off in June.

What big tenants are out there?
There are several. But they’re not at a decision point. I don’t want to comment on particular tenants, but there are a lot of big tenants thinking about long-term space and where they want to be. Many don’t want to stay where they are.

Do you think big tenants that are in the market are looking at new development sites like the West Side Yards and Manhattan West, and do you look at those sites as competitors not only to 250 West 55th Street but to your entire portfolio?
There will be tenants that go to those sites. Look, if there’s growth in the market, there’s room for everyone and we want to see N.Y.C. grow too. I’m not worried about that kind of overflow to development areas. There will always be demand in the core of Midtown, in the Plaza district and on Fifth, where we have most of our assets. That’s not going away.

Boston Properties is known for its collection of top-level trophy buildings, like the GM Building and 510 Madison Avenue. Aren’t those spaces harder to lease because of the higher rents they charge in a slow market like this?
At the GM Building, our rents are not far from where they were in 2007 at the peak of the market. We don’t have much vacancy in the building and we’re not going to have any space for several more years. For the upper floors we’d charge rents approaching $200 per square foot and there are tenants that will pay. There is always a flight to quality and you see it most in down markets. There are other factors than rent that go to the bottom line of a company, like quality of life, the ability to attract staff, efficiency of the space, large windows, no convectors, no columns, high ceilings and other amenities. Those are important factors for high-end tenants and there aren’t that many buildings that can provide that.

As great as your trophy buildings are, can they compete with the amenities and features of a state-of-the-art new construction building?
The GM Building does. 601 Lexington is a column-free, center-core space that is extremely efficient. 399 Park is a very efficient building. We bought these properties because we know they have enduring value. They are timeless. And they’ll always be able to compete from the standpoint that they’re so well located. We also modernize our buildings and try to keep up.

What leasing did you do during the first quarter?
We had a flurry of deals and interest at 510 Madison, we had some renewals at the GM Building. I will say that I think the market has a pulse right now and I’m looking forward to a good second quarter too. I hope other landlords feel that, too. There is a new sense of energy out there. The global situation seems to have stabilized a little and people feel better. They know the nominees for president. That goes into the collective psyche.

Are you saying that people are relieved that a candidate like Santorum is out of the race?
I didn’t say that. I’m sticking with what I just said.

Where do you think rents are going? It doesn’t seem like landlords have had the leverage to raise them.
You’ve seen the asking rent creep up and some of the concessions have tightened a bit. I wouldn’t describe it as a rising rent market. I think we’re in an equilibrium situation, which by the way I do think is going to change when we look downstream because we have little new supply. As everyone has written, it all depends on jobs. If there is continued job growth—I think we added 70,000 jobs in the city in 2011—if anything like that continues, the space market will contract dramatically in the next two years. I have given up predicting the rest of the world and how that affects us here.

So you feel optimistic?
There is no such thing as a pessimistic developer.

New media and tech tenants taking space in Midtown South has been the story of the first quarter and one of the biggest trends for months. How come so few have come to Midtown?
Well, that’s a terrific question. They have a different set of drivers than the financial and law firm tenants. They’re all about being cool and hip and cutting edge and they’ve kind of defined Canal to 34th Street west of Fifth Avenue as their chosen location. They don’t mind older buildings and funky space. It’s a very exciting phenomenon for New York. It’s not like the dot-com bust. They tend to have real businesses and they have income unlike the speculation in 2000. It just bodes well for the city as a whole and it’s not going to hurt Midtown, it’s only going to help it. When the city is vibrant there are businesses that feed off each other. These tech tenants need accountants and lawyers, they need to invest their money and the tighter the Midtown South market is, it puts some upward pressure on Midtown too. I wouldn’t be surprised if these tech companies mature and move north in the future.

As you mentioned, you’re building 250 West 55th Street, which is going to be a beautiful new tower. You have an anchor tenant, the law firm Morrison Foerster, but what has been the reception in the market for the rest of the space?
Well, the floors are about 25,000 square feet apiece (they’re larger in the base). We’re not yet marketing the top tower floors but we are talking to a couple of tenants for space at the bottom of the building for a fairly substantial block. The top will take care of itself when we can take people up and show them how stunning those will be. You get great park views but mostly Hudson River views and the good river views start at floor 16. We’d be about 50 percent full if we fill the base.

What are asking rents in the building?
The top of the building will be very different than the bottom. Obviously, the bottom will not be triple digits. Let me leave it at that.

You’re into art and helped with the installation of a gallery of painting in the atrium of 601 Lexington Avenue. Can you talk about that for a moment? What role does art play in an office building?
Well, art definitely has a place in buildings, but some buildings have such a strong design character they don’t need it. There will not be artwork in 250 West 55th Street but the back wall of that lobby will be a water feature where water will be trickling down a wire mesh screen, something like 20 feet high. It goes wall to wall, floor to ceiling. It’s going to be quite beautiful and some might consider it a work of art. When we talk about 599 Lexington you could describe it as the property with the big Stella in the lobby [a large painting by artist Frank Stella hangs there]. It can be defining.

Global private equity firm Teneo Holdings, which counts former US President Bill Clinton and former UK Prime Minister Tony Blair as advisors, will double the size of its office space by taking a total of 30,206 square feet at 601 Lexington Avenue, The Commercial Observer has learned.

601 Lexington Avenue.

The firm will be moving from its 15,000-square-foot office on the 55th floor to its new turnkey office on the 45th floor inside the former Citigroup Center building, a person familiar with the negotiations said.

Teneo Holdings will be subleasing the space from hedge fund Citadel Investment Group. Asking rents in the building are $89 per square foot, according to CoStar. The lease is for 5-years. The building is owned by Boston Properties.

Matthew McBride of CBRE represented Teneo Holdings in the lease transaction. John Nugent and Sam Seiler, both of CBRE, represented Citadel.

Calls to Mssrs. Nugent, Seiler, and McBride were not returned.

Teneo Holdings is citing a recent hiring binge for its reasons for expanding, said the source.

A Teneo Holdings spokesperson did not return a phone call requesting comment.

Citadel expanded to 165,000 square feet inside 601 Lexington back in March 2011, taking three floors that were formerly occupied by General Motors.

But Citadel was reportedly looking to offload some of its office space following the sale of its investment banking unit to Wells Fargo in August 2011.

It had put the 48th floor space, sized at 30,500 square feet for 100 trading positions, on the market, according to a November Absolute Return + Alpha article.

Teneo Holdings is led by Declan Kennedy, who served as the U.S. Economic Envoy to Northern Ireland at the U.S. Department of State. The firm also counts Douglas Band, the Counselor to former President Bill Clinton, as a member of its senior leadership team.

Both President Clinton and former Prime Minister Blair serve on the firm's advisory board.

Citibank has renewed its nearly 500,000-square-foot office lease at 601 Lexington Avenue.

Merrill Lynch, a subsidiary of Bank of America that has an asset management office at the iconic slant-roofed skyscraper, also just renewed its lease at the property, for all of floors 46 and 47, which total about 60,000 square feet.

Citibank’s decision to renew at the property appears to be a sharp about-face from previous efforts to dispose of the space. During the economic downturn, several real estate executives familiar with the location said that Citibank had quietly made the real estate market aware that it was interested in divesting itself of the space. It never actually went through with efforts to shed block of offices however.

601 Lexington Avenue

A spokesperson for Citibank said that it was consolidating a total of seven locations in midtown into 601 Lexington, its largest Manhattan facility, and also another office building across the street that it has long occupied as its world headquarters, 399 Park Avenue.

"Citi is consolidating some of its midtown Manhattan offices as part of our ongoing efforts to manage expenses and increase operating efficiencies,” Anu Ahluwalia, a spokeswoman for the bank wrote in an email to The Commercial Observer.

Both 601 Lexington Avenue and 399 Park Avenue are owned by the real estate investment trust Boston Properties, a large landlord in the city that holds a collection of top tier, trophy skyscrapers.

Among the locations that Citibank is leaving in order to backfill staff into 601 Lexington is 666 Fifth Avenue, a Midtown tower where it bases its private banking operations (Jared Kushner, owner of The Commercial Observer is an owner of 666 Fifth Avenue).

Robert Alexander, a top executive with the real estate services company CBRE, represented Citibank in the deal with a team of CBRE executives. A leasing team from the real estate services firm Jone Lang LaSalle, led by top company executives Frank Doyle and Peter Riguardi, manages leasing at 601 Lexington Avenue. Andrew Levine a top leasing executive at Boston Properties is also responsible for overseeing leasing at the property. None could be reached for comment.

The Citibank deal is one among a number of recent transactions in which a large office tenant has decided to stay put. Morgan Stanley recently signed an over one million-square-foot office lease to remain at One New York Plaza. Viacom, the media conglomerate, also reached an agreement that was first reported by The Commercial Observer in recent weeks to remain at 1515 Broadway in a record 1.6 million square foot transaction.

GE Capital Real Estate has provided a $575 million loan to affiliates of a Blackstone real estate fund for its purchase of 66 U.S. industrial properties. The properties are located across 10 states in the south, mid-Atlantic and midwest and were bought from Australia’s Dexus Property Group.

Frank Cohen, a senior managing director at Blackstone, said that several factors put GE ahead in the race to fund the acquisition.

“There was significant interest in financing this transaction, but GE’s creative balance sheet approach and flexible deal structure was a perfect match for our business plan,” Mr. Cohen said. “They’ve been a responsive, experienced lender who can deliver on transactions like this.”

To his point, GECRE underwrote and closed the loan in under 45 days, according to an announcement it released about the transaction, which allowed Blackstone Real Estate Partners VII to pick up 129 buildings and a total of 16.4 million square feet.

A spokeswoman for GECRE told The Commercial Observer that executives were traveling and unavailable for comment. However, in a prepared statement, Alec Burger, president of the North America division, said that it had a previous working relationship with Blackstone. “Our team focused their expertise and efforts on this portfolio and delivered a structure that met Blackstone’s needs,” Mr. Burger added.

Blackstone has said that it will sell its U.S. office holdings, valued at $22 billion. Concurrently, as The Commercial Observer previously reported, the firm leased 31,000 square feet of space—the entire 48^th floor—at Citadel Group’s 601 Lexington Avenue.  

cgaines@observer.com

Citibank is cutting loose more space in Midtown.

After deciding to give up 230,000 square feet at 666 Fifth Avenue, the bank is offering two floors for sublease at 909 Third Avenue totaling over 60,000 square feet.

Citibank is making the 1.3 million-square-foot building’s entire 18th and 19th floors available.

909 Third Avenue

The space is the latest in a smattering of subleases that have been turned over by large financial institutions and other big tenants in the city in recent months.

Société Générale, a large French financial company, leased over 500,000 square feet at 245 Park Avenue in late 2010 but decided to sublease at least 70,000 square feet of it earlier this year. Nomura meanwhile decided to exercise options in a jumbo 900,000-square-foot deal it signed last summer at Worldwide Plaza to give back at least 160,000 square feet of that space.

In April, the publishing company McGraw-Hill tossed a little over 200,000 square feet onto the sublease market at 2 Penn Plaza.

Citibank’s sublease offering appears to show that there was a flip side to its decision to renew nearly 500,000 square feet in late May at 601 Lexington Avenue, the office tower across the street from its world headquarters at 399 Park Avenue. In past years, Citibank had also shopped the space at 601 Lexington Avenue for sublease. The bank ultimately decided to keep its offices in the landmark slant-roofed tower but with the caveat apparently that it would shed space elsewhere.

Both 909 Third Avenue and 666 Fifth Avenue are owned by the large office REIT Vornado (666 Fifth Avenue is also partially owned by Jared Kushner, owner of The Commercial Observer). Vornado is buffered from the departures. At 909 Third Avenue, whether or not it subleases the space, Citibank will continue to pay rent for the floors. At 666 Fifth Avenue, the bank is not scheduled to depart until the fall of 2014.

A leasing team from Newmark Grubb Knight Frank is handling the sublease offering at 909 Third Avenue for Citibank.

Fixed income brokers KGS Alpha Capital Markets has inked a deal to sublease 30,206 square feet of space at 601 Lexington Avenue, relocating its NYC headquarters from 850 Third Avenue, The Commercial Observer has learned. 

The company will be taking the entire 44th floor in the deal, which was previously occupied by Citadel Investment Group. Asking rents in the 5-year deal were $85-a-square-foot. 

601 Lexington Avenue (photo courtesy of CoStar)

John Nugent and Sam Seiler of CBRE represented Citadel Investment Group. Andrew Sachs and Bill Levitsky of Cushman & Wakefield represented KGS Alpha Investment Group in the transaction. 

Neither Mr. Nugent nor Mr. Seiler could be reached for comment. Cushman & Wakefield did not immediately respond to an interview request.

Citadel Investments has been subleasing most of its space at 601 Lexington Avenue after its investment banking unit was sold to Wells Fargo in August 2011.

CBRE was marketing a total of 90,000 square feet of sublease space on the 48th, 45th, and 44th floors at 601 Lexington, a 59-story building owned by Boston Properties. 

In April, private equity firm Teneo Holdings, which has ties to former US President Bill Clinton and former UK Prime Minister Tony Blair, signed a sublease for the 45th floor, sized at 30,206 square feet. 

Then in July, Blackstone snapped up the 48th floor space from Citadel for a 5-year lease.

A spokesman for KGS Alpha Capital Markets could not immediately comment on the deal.

Citadel found itself the unwitting victims of construction contracting firm Aragon, which was accused of overcharging the hedge fund $1.2 million during its office build out at 601 Lexington Avenue. 

Manhattan District Attorney Cy Vance accused Aragon CEO Alex Getelman of using the stolen funds to finance his mansion at Old Brookville, NY.

drosen@observer.com 

With eight buildings totaling close to nine million square feet across a number of submarkets, Boston Properties is one of the largest owners of real estate in Midtown. Andrew Levin, senior vice president of leasing in the real estate investment trust’s New York office, has his finger on the pulse of the market. He spoke with The Commercial Observer last week about leasing trends in Midtown and Boston Properties’ development of 250 West 55th Street, which will open in fall 2013.

The Commercial Observer: Boston Properties has a significant presence in Midtown. Can you give an overview of your portfolio?

Mr. Levin: Some of our buildings are the General Motors building, which is 1.8 million square feet; 601 Lexington, formerly Citigroup Center, which is 1.7 million square feet; 399 Park Avenue, which is 1.7 million square feet; 599 Lexington Avenue which is one million square feet; Times Square Tower, which is 1.2 million square feet; 125 West 55th; 540 Madison and 510 Madison.

We are also developing 250 West 55th, which is another million square feet. It will open in September or October of this year.

Are you leasing space in the building now?

We have leased basically half to Kaye Scholer and Morrison & Foerster.

When you look at the Midtown market, how do you evaluate leasing, both in your portfolio and for the market as a whole?

With respect to our portfolio, we don’t have much available space. If you look over our whole portfolio in the aggregate, we don’t have much available space. If you look at the market, in Midtown the vacancy is about 8 percent.

Midtown is basically a fixed-supply market; you’ve got 220 million square feet of space. Our building, which is a million square feet, is the only new building that’s going to be added for the next two to three years. Maybe 7 Bryant Park will be added in a couple years, and it will be three years before you get the Coach building on the Far West Side. The supply is fixed; the question in Midtown is always: what’s the demand? Last year, you saw an average leasing year, if you look at the five-year average.

What does the rest of this year look like?

If you look at Midtown, the major drivers are financial services and law firms. Is there anything driving financial services on a large scale? I would say there’s not much going on in terms of expected growth for the large players in Midtown.

If you look at the smaller players, it seems like the smaller players are still catching a little bit of wind. Whether that’s due to the stock market or the capital flows into the U.S., it seems the little guys are getting bigger. I think the big guys are staying the same. What does that get you in the end? I think it gets you a pretty similar demand cycle to what we saw last year. I’d say we are expecting it to be an average year. We’re not expecting hyper growth, and we’re not expecting things to go downward. I think it’s going to be pretty consistent.

Are there any submarkets in Midtown that stand out to you due to their leasing activity compared with the rest of the market?

I think Park Avenue and the Plaza District have remained quite strong. Certainly the Plaza District caters to some of those smaller, high-end tenants, and I think the velocity there has been quite good. You still see a lot of new business creation on the small financial side—people breaking off from the large banks to start their own hedge fund or private equity firm, and things like that. The Plaza District has benefited from that; we’re seeing it at 510 Madison and 540 Madison, where we’ve got smaller space to lease.

Park Avenue is pretty tight, and that’s for some of the next-stage, more mature companies from 25,000 to 50,000 square feet. We leased up 150,000 square feet of space at 399 Park relatively quickly because that high-end, good space on Park Avenue, at what I think to be a reasonable price, was pretty well sought-after. I think Park Avenue is pretty tight and attractive, and so that’s a good, tight market.

We benefit at 599 and 601 Lexington because we are technically part of the Park Avenue market, and when there’s tightness on Park Avenue, we tend to do well—and we’re seeing some of that activity.

Are any submarkets trailing?

Sixth Avenue seems a little bit softer. I think it’s just a function of pretty good size availability. You’ve got some pretty large availabilities lower down in some of the buildings there. When the large financial services firms are not there to eat up that space, who is going to? The law firms are not going to take that space. It just does not work for them physically.

The one thing that Midtown is actually lacking is a good quantity of large blocks of space. Once you get over the 200,000- to 250,000-square-foot threshold, it’s hard to find a good, contiguous block of space in Midtown. The reason you’re seeing all this activity over at the West Side Yards is because if you’re a 500,000-square-foot tenant and you’ve got expiration coming in 2018 or 2019, you can count on one hand the buildings in Midtown you can go into with space you know is going to be available. You’re forced to look at new development; you have to be that far ahead of time. A lot of them are choosing to look over in the West Side Yards versus going Downtown.

Speaking of development, how do you feel the rezoning of Midtown East and the potential development there will impact the market?

The type of space they are talking about developing for Midtown is, again, all highly priced space. So, now it’s going to be a decision: do I stay in the core of Midtown at $90 a foot, or do I go to Hudson Yards for $75 a foot, or do I go Downtown for $65 a foot? Anything that is going to be added to the core of Midtown is going to be more interesting, higher-priced, higher-margin space.

What sort of tenants are you hoping to attract to 250 West 55th Street?

When we set out the design for the building, we designed it specifically for law firms and professional service firms knowing that those firms tend to move to new buildings. A lot of firms are looking for efficiency, and a new building offers that efficiency. They’re attracted to new development. So, we saw that and said: “We’re going to build a new development for law firms, because that’s our target market.”

We have Kaye Scholer at the base, on three through 12, and we’ve got Morrison & Foerster for 17 to 24, and we really have the top of the building, a 38-story building, and a few in-fill floors. There are some growth floors and expansion floors for the tenants. What the law firms like about a new building is we can plan for their growth going forward. When you have a brand-new building, you have an open slate. You can plan for the tenant; they can get their growth pattern set.

When the Blackstone Group was preparing to relocate its Innovations & Infrastructure team to a new 37,000-square-foot space on the 22nd floor of 601 Lexington Avenue in Midtown, it knew that the technology division would require a different kind of work environment than typically used by the private equity giant.

That would mean an office that would have the Innovations team’s New York-based staff of roughly 150 tech developers and designers “in the right frame of mind,” according to Bill Murphy, Blackstone’s chief technology officer and head of the Innovations division, who took Commercial Observer on a walkthrough of the space in July. “I think comfort breeds creativity.”

So Murphy surveyed his staff to find out how he could make their surroundings more comfortable (they already have a laxer dress code than their fellow Blackstoners). What he discovered was a desire for an aesthetically pleasing, multifunctional environment—and that’s exactly what Blackstone, with the help of architects M Moser Associates, delivered at 601 Lex.

The office, which the Innovations team moved into in March after a 10-month buildout process, is anchored by a large common area featuring a kitchen area as well as tables and booths for meetings and work sessions. A large wall equipped with video monitors enables Murphy and his team to hold conferences with satellite offices around the world, while an adjoining conference room is separated from the common area by an impressive, garage-style door that opens into the main space—enabling Blackstone employees to reconfigure the room as they see fit, whether it’s using the conference room for a private meeting or opening it up into the common area for an all-hands session.

“Bill had a vision of creating a space that was unique and not the standard Blackstone criteria, as far as building out spaces,” Charlton Hutton, a senior associate at M Moser and one of the lead designers of the space, told CO. While Blackstone wanted a space that would work to its advantage in recruiting and retaining talent, “they didn’t want to look like a startup—they are a very sophisticated and mature company,” Hutton said. He described the office’s design, which couples hardwood floors and wood-paneled walls with a refined, corporate feel, as a “hybrid approach between a tech firm and a financial firm.”

Murphy noted that while open office layouts are all the rage these days, his employees wanted more intimate surroundings where they could focus on the task at hand. So while the Innovations team mostly occupies workstations that can be converted between seated and standing desks, conference rooms (named after history’s great innovators—George Washington Carver, Alexander Bell and Archimedes) are scattered throughout for a private setting.

In one of the coolest quirks of the space, some of those rooms feature treadmills enabling workers to stretch ther legs while they work (Murphy likes to hop on the treadmills—which have a max speed of 4 miles per hour—while reading through reports). And, in yet another testament to the space’s prioritization of employee wellbeing, most of the office’s conference rooms and private offices occupy the middle of the floorplan—meaning the bullpen areas, housing most of the Innovations team’s desks, occupy the edges of the floorplan and get to enjoy the natural light that floods in through the office’s large windows.

“It speaks to this wellness concept in design,” Hutton said of the space’s configuration and features. “There’s a lot of talk about being sustainable in building, but let’s also focus on people—your staff’s physical and mental wellbeing. That treadmill may be where you get your best ideas.”

One of the world’s most successful law firms is growing at the former Citigroup Center in Midtown East.

Kirkland & Ellis, which is considered the world’s second highest-grossing law firm with $2.65 billion in annual revenue, signed a deal to expand its space at 601 Lexington Avenue to 520,000 square feet, according to The Real Deal. The 108-year-old firm will grow by 120,000 square feet at Boston Properties’ 59-story tower between East 53rd and East 54th Streets.

The expansion comes two years after Kirkland & Ellis signed an early renewal for 400,000 square feet on a lease that will run through 2039, Commercial Observer reported in 2015. Asking rents in the building are “north of $100 a square foot,” TRD noted. The building is also home to tenants like investment bank BTG Pactual, Blackstone Group’s Innovations team and General Motors.

JLL’s Frank Doyle, Cynthia Wasserberger and Dave Kleiner and Boston Properties’ Andy Levin are responsible for leasing at the 915-foot-tall building. Savills Studley’s Mitchell Steir, Matthew Barlow, Greg Taubin, David Goldstein and Jason Perla handled the deal for Kirkland & Ellis. A JLL spokesman didn’t respond to a request for comment, and Savills Studley’s brokers declined to comment through a spokeswoman.

The Chicago-based firm is known for its private equity, restructuring and intellectual property practices. Toys “R” Us recently hired Kirkland & Ellis to restructure roughly $400 million in revolving and long-term debt due in 2018, as CO reported in September. Its real estate clients have included Starwood Capital Group, casino company Caesars Entertainment Operating Co. and mall operator Macerich.