Sunday, December 5, 2010

"Financial Software Maker Pays '97 Price for Trade Center Space,"

March 10, 1999, New York Times, "Financial Software Maker Pays '97 Price for Trade Center Space," by John Holusha,

Eighteen years ago, Rob Patterson founded his company, Baseline Financial Services, in the basement of his home in Madison, N.J.
His space needs have grown considerably since then. He recently signed a 15-year lease for 60,000 square feet on the 77th and 78th floors of Two World Trade Center.
Although rental rates for Class A space in downtown Manhattan have surged in recent quarters as vacancy rates have declined, Mr. Patterson was able to lock in a lower rate by assuming the lease of another company that was negotiated two years ago.
''In late 1997, the market for Class A space downtown was in the low to mid 20's,'' said David Rosenbloom, a director of Cushman & Wakefield, the real estate services company, referring to the annual cost in dollars of a square foot of space. ''Today that same space is in the high 30's to low 40's.''
But a previous tenant in the building, Georgeson & Company, an adviser to companies on proxy issues, had sold some of its operations and is negotiating to relocate to smaller space in the Trade Center. The larger space, which was partly built but not ready to move into, was available at 1997 rates.
''This lease transaction allows Baseline to operate in a Class A property at below market rates,'' because of the existing lease, Mr. Rosenbloom said. Class A properties are in the newest and most technically advanced buildings.
With an assumed lease, the tenant pays the rent directly to the landlord, rather than to the previous tenant, as would be the case with a sublease. Nevertheless, the previous tenant remains on the lease and is ultimately responsible for the rent payments.
Trade Center managers had an incentive to allow Baseline to assume the previous lease because of the gains it had in the interior construction of the Georgeson space -- an investment it could have lost if a new tenant demanded a different layout, Mr. Rosenbloom said.
In addition to the favorable terms, Mr. Patterson said, he was attracted to the Trade Center towers because of their large, 45,000-square-foot floors. The company will have the entire 77th floor, with the rest on the 78th floor. The two floors are connected by an escalator.
Mr. Patterson said most of the company's 140 employees would be on the 77th floor, with some executive offices, meeting rooms and a reception area on the 78th.
Baseline is a software development company that produces products that help financial portfolio managers in making investment decisions. Its clients include more than 700 major banks and other financial institutions, 180 of which were added last year.
The company's revenues have grown 35 percent annually in the last five years, leading to the demand for space. Baseline is a subsidiary of the Primark Corporation, a publicly traded company, specializing in information technology.
Baseline's space requirements are driven by considerations similar to those of many other information technology and new media companies that have fueled the revival of commercial property in lower Manhattan.
''Software is produced by teams,'' Mr. Patterson said, ''so it is important that people can easily meet face to face.'' Putting all the people actively involved in developing the products on one floor is expected to increase this interaction.
The company hopes to move into the Trade Center in August, leaving its current location at 61 Broadway, where it occupies 32,000 square feet. Staying at that location, where floors are 17,000 square feet, would have meant spreading the company over many floors, interfering with the needed teamwork.
As it was, the company was fortunate to stay put for as long as it did. When it first moved to 61 Broadway, it started with 2,700 square feet of space. ''We got lucky and some people moved out, so we are able to take their space,'' Mr. Patterson said.
Should the company continue to grow, it may be able to stay at the Trade Center for a while, as well. Mr. Rosenbloom said that the previous tenant had negotiated the right to occupy some expansion space, should it become vacant, and that that right was assumed by Baseline.
The company will be able to move more quickly than might otherwise be possible because much of the interior construction was under way.
''The 77th floor is about half finished, but the 78th floor is still raw space,'' Mr. Rosenbloom said. He said the layout of the 77th floor was largely acceptable to the new tenant and would proceed. He added that the materials purchased and the construction funds reserved for the 78th floor were included by the landlord as part of Baseline's assumption of the lease and that the company was hiring someone to design the upper-floor offices.
Mr. Patterson said although it might seem glamorous now to be the president of a company that was started in a basement, ''at the time it didn't seem very glamorous.''
''We started 18 years ago, and I guess we were a little ahead of the wave,'' he said. ''Baseline makes products for PC's,'' or personal computers, which did not come into widespread use until the mid-1980's. ''It took about eight years of trial and error to figure out what worked,'' he said.

No comments: