Posted: 3:51 am
September 24, 2008
POSTURING has always been a big part of negotiating and now it seems Viacom and the owners of its Times Square headquarters are ratcheting up their stances.
Sources close to the entertainment giant complained to us that, contrary to comments from owner SL Green Realty, the owner of MTV and Paramount Pictures has not agreed to renew.
In fact, according to the Viacom camp, the media giant and SL Green are at odds over the possible rent increases, are overwhelmed by ongoing construction, are underwhelmed by the design of the renovation and - ewww - are creeped out by a sudden infestation of cockroaches.
At an investor conference last week, SLG's Chief Operating Officer Greg Hughes implied that Viacom's 1.3 million-foot-plus renewal at 1515 Broadway was "likely" a done deal.
Viacom execs said they were "surprised" to hear Hughes' take on the situation.
"They have certainly not made a decision as was indicated at the conference," said our Viacom source. "They were a little surprised [to hear it said that they would likely renew]."
And even if they do renew, "it won't be at the $85-a-foot number that SL Green indicated," insisted our source. "They have not decided."
Should Viacom exercise its December option to renew and the parties do not agree to the rents, they would be reset based on the "fair market value" of comparable rents in 2009 as decided through an arbitration proceeding.
"Where the market will be, as we head into the end of the year, will determine where that negotiation goes," Hughes said at the conference. "So, the very good news is we have signed a couple of recent deals in that building for $85 a foot. And their [Viacom's] fully escalated rent sits at $52 a foot.
"So, I think it's likely that they stay and then it'll just be a question of, is $52 fully escalated?," he said. "Is that going to $60, $70 or $80? And a large part of that is going to be dependent upon what happens [in] the market over the next 12 months."
The Viacom source also complained that the ongoing lobby refurbishment is currently "a maze of plywood. It's hardly the first-rate renovation that SL Green is talking about."
"They are not happy with the renderings, either. It's creating a Harlem slumlord situation. There are cockroaches in the building that weren't there before."
Naturally, SLG contends that Viacom was advised of the major $160 million façade and lobby renovation - first revealed by Post colleague Steve Cuozzo.
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