NYC Health + Hospitals Consolidates with $758M, 25-Year Lease

NEW YORK CITY—NYC Health + Hospitals signed a deal with GFP Real Estate and Northwind Group for 526,552 square feet of office space at 7 Hanover Square. The public healthcare provider states that the 25-year, $758 million lease will increase its efficiency and reduce its real estate costs by $16.5 million in five years and by $203.1 million over the lease’s lifetime.

The public healthcare system will shrink its overall real estate footprint by 20%, moving from six locations into the Lower Manhattan complex that is often referred to as the Guardian Life Building.

“By eliminating the inefficiencies of having staff in multiple sites, we will reduce travel time and expenses, strengthen the work environment, and build a stronger operation to provide better support to our frontline staff throughout the five boroughs,” says Mitchell Katz, president and CEO, NYC Health + Hospitals. “The more we save in rent, the more doctors, nurses, social workers, and pharmacists we can make available to our patients, which is our priority.”  

Approximately 2,600 administrative employees will relocate from the following locations: 125 Worth St., 160 Water St., 199 Water St., and 33 Maiden Lane in Manhattan; 1 MetroTech, in Brooklyn; and from the Factory, in Long Island City, Queens.

Newmark Knight Frank’s Brian Waterman and Ira Rovitz represented NYC Health + Hospital in securing the lease.

GFP and Northwind are purchasing 7 Hanover from Guardian Life for $308.5 million. Cushman & Wakefield’s Doug Harmon and Adam Spies brokered that deal which is anticipated to close in September 2019. Prior to the closing, the health and hospital system will sublease 100,000 square feet from Guardian Life. After the closing, during a five-year period NYC Health + Hospitals will move into 14 floors of the 29-story building. Guardian Life plans to head over to Hudson Yards.

Meanwhile GFP and Northwind have already begun $250 million in renovations to the property. The project will convert the building into two new, separate office addresses, having different entrances: 50 Water St. will be at the base and 100 Pearl St. will be a 400,000 square-foot office tower.

S9 Architects and Tuller McNellus Feld designed the redevelopment that will include ground floor retail with a food hall, space to lease on the 14th floor and two penthouses. The 100 Pearl St. lobby will include seatings for meetings, an adjacent restaurant, and places for coffee and wine.

NKF will handle the going-forward leasing arrangements. Hal Stein, Andrew Peretz and Ben Shapiro will serve as agents for 100 Pearl St., and Benjamin Birnbaum will handle leasing the ground floor retail spaces.

The project is the second major acquisition and redevelopment for GFP and Northwind. In 2014, they acquired, renovated and leased 40 Exchange Place, refinancing the property last year.

Ran Eliasaf, managing partner at Northwind, expressed confidence in the Financial District. “The combination of vision, design and top-level execution by the team involved is completely transforming 100 Pearl St. into a very attractive office building offering unique spaces with a great amenity package catering to a very wide range of tenant types,” he adds.

“We are excited to share our vision for 50 Water St. and 100 Pearl St. with the market,” says Eric Gural, GFP’s co-CEO. “We believe that creating two distinct office buildings, with separate entrances and identities, gives us an opportunity to satisfy very different market demands.”

In October 2017, Newark Holdings issued a press release that announced its rebranding. It changed its name to GFP Real Estate to avoid confusion with Newmark Knight Frank, as the brokerage prepared for its public offering. At the time, at Newmark Knight Frank, Jeffrey Gural stepped down as chairman to become the chairman emeritus.