NEW YORK CITY—The Hospital for Special Surgery will be shifting some of its New York City operations to four full floors at 777 Third Ave. in Midtown East in a transaction that involves a sublease with Avon and a direct lease with the building ownership.
The Hospital for Special Surgery will occupy 98,600 square feet of space under a sublease with Avon for four full floors (two-through five) that runs through June 2026. HSS also signed a direct lease that expires in 2032 at the 38-story office property that is co-owned by the William Kaufman Organization and the Travelers Companies, Inc. HSS plans to take occupancy at the 38-story, 575,985-square-foot class A office tower in January 2018.
Avon currently leases floors two through 12 at 777 Third Ave., totaling 271,150 square feet. The cosmetic firm’s lease there expires in June 2026.
HSS will move some of its non-medical administrative and general business offices into the building, according to the building owner, which recently-completed a multi-million-dollar renovation at the property that included the restoration of the lobby’s original Italian Calacatta marble, as well as the addition of new elevator cabs, state-of-the-art technology, safety and emergency systems.
“As HSS continues to expand, this new space in Midtown East will house certain non-medical staff to further allow us to strategically support clinical growth at our main campus,” says Stacey Malakoff, CFO at HSS. At press time the size of the HSS workforce at 777 Third Ave. had not been determined.
Michael I. Lenchner, VP and director of leasing of Sage Realty Corp., the leasing and management division of William Kaufman, represented building ownership in the transaction. Brian Given and Sheena Gobil of Colliers International represented the tenant. Asking rents were in the $70s-per-square-foot range.
“We are pleased that HSS has chosen 777 Third Avenue for additional administrative offices,” Sage Realty’s Lenchner says. “This significant transaction further demonstrates the strength of the Third Avenue corridor, the desirability of our building and the ongoing resurgence of Midtown East as a world-class business district.”
Major tenants at the property are: Starboard Value LP; Sompo America Insurance Services LLC; Hudson Bay Capital Management, LP, an employee investment manager; SEI Investments Company, a publicly-traded investment management firm and ERG Property Advisors, a commercial real estate firm. Retail tenants at the building include HSBC Bank and LensCrafters.
HSS has scheduled an opening in October for its new outpatient facility in Westchester County. The new 50,000-square-foot facility at RPW Group’s 1133 Westchester Ave. is HSS’ largest outpatient center to-date and will have approximately 20 full-time support employees in addition to physicians when it first opens its doors. HSS Westchester will offer medical services, imaging and a full spectrum of rehabilitation services.