The new construction property comes with a 20-year corporate lease with rare rental increases in the primary lease
Two of the deepwater leases have a seven year primary lease
term, while all of the others have a five year lease terms.
Walgreens will have 20 years of primary lease
term remaining upon commencement and the lease features rare rental escalations in the primary term and renewal option periods.
Having such "privity of contract" with the property owner assures the space user that building services will be available directly from the landlord without the involvement of an intermediary, whereas a subtenant is at risk of losing its space as a result of its sublandlord's default under the primary lease
With the help of its tenant rep, the New York office of The Staubach Company, Novell, whose 10-year primary lease
for the 35th floor ended in January, searched all along the Sixth Avenue corridor for a new home.
Due to the construction component, financing was secured for a 26-year term, to mirror the approximate ten-month construction period and the 25-year primary lease
between ownership and tenant.
However, should the residual value increase over the primary lease
term, the potential rental income from the property will have increased as well.