Oppenheimer's 220,000-Square-Foot FiDi Lease Comes With a Rent-Free Stretch and an Exit Option. Lease Lessons for Growing New York Companies

NEW YORK — Big-company office leases usually reach the public as a square-footage number and a quote from a CEO. Oppenheimer’s new headquarters deal is different, because the company had to file the key terms with the SEC. For any founder or small-business owner who will someday negotiate an office lease in Manhattan, that filing is a useful look at what tenants with leverage ask for.

The Deal

Oppenheimer & Co., the investment bank and wealth manager, will move its headquarters to about 220,000 square feet across six floors of 32 Old Slip, a 36-story tower in the Financial District owned by RXR, with a phased move-in targeted to begin in the first quarter of 2028. It is leaving 85 Broad Street, where it has about 270,000 square feet, according to a JLL spokesperson quoted by Bisnow.

Gov. Kathy Hochul announced on Nov. 9 that the move represents a $66 million investment and retains 1,001 full-time jobs. Bisnow reported that Empire State Development is providing a $3.2 million capital grant, and that RXR and Oppenheimer will jointly invest the roughly $66 million in a renovation and fit-out led by Gensler.

What the SEC Filing Shows

Oppenheimer Holdings’ Form 8-K, filed after its subsidiary Viner Finance signed the lease on Nov. 5, lays out the structure:

• Size and length. About 221,339 rentable square feet for an initial term of roughly 15.5 years.
• Free rent up front. No fixed rent until the later of six months after the landlord delivers the final portion of the space or July 1, 2028.
• Stepped rent. About $13.3 million a year for the first five years, about $14.4 million for the next five, and about $15.5 million after that. There’s also a two-month rent abatement at the end of year 10.
• Landlord-paid work. RXR will perform specified delivery-condition and turnkey work at its own expense. Oppenheimer pays for furniture, equipment, technology and any upgrades beyond that.
• An exit door. Oppenheimer can terminate all or part of the lease as of the 10th anniversary of rent commencement by paying a fee, capped at about $24 million, tied to the landlord’s unamortized leasing costs.
• Room to grow. The lease includes renewal and expansion rights.

The company says it will occupy the space tranche by tranche as floors are delivered.

Why the Landlord Said Yes

Lower Manhattan has been a tenant’s market. Bisnow, citing Cushman & Wakefield, reported that the western side of the Financial District had a 26.7% vacancy rate at the end of the third quarter, one of the highest in the city, though leasing south of Canal Street has picked up this year. That context explains why a landlord would agree to months of free rent, pay for build-out and give a tenant a way out at year 10.

The terms also show what a tenant gives up in exchange: a long commitment. A 15-year lease with stepped rent locks in costs for a long time, and the termination fee is designed to repay the landlord’s investment if the tenant leaves early.

What Smaller Tenants Can Borrow

A 10-person startup signing 3,000 square feet won’t get a $24 million termination clause. But the same categories are negotiable at almost any size, especially in submarkets with high vacancy:

Ask for free rent, and tie it to delivery. Oppenheimer’s free period starts when the space is actually delivered, not when the lease is signed. Construction delays are common, and a start date tied to delivery protects you from paying for space you can’t use.

Get the landlord’s work in writing. “Turnkey” and “delivery condition” mean whatever the lease says they mean. Spell out what the landlord builds and pays for, and what falls to you.

Budget beyond the rent. Oppenheimer expects “significant additional capital expenditures” for furniture, equipment and technology. Smaller tenants routinely underestimate moving, cabling and furniture costs.

Negotiate an exit before you need one. A termination or contraction right, even with a fee, is often more valuable to a growing company than a slightly lower rent. So is an expansion right if you expect to hire.

Know the market you’re in. Vacancy rates vary widely between submarkets. Our earlier coverage of Manhattan office leasing in October covered Colliers’ finding that Manhattan availability was at its tightest since August 2020. Where space is tight, tenants have less leverage than in a high-vacancy area like the western Financial District.

Ask about incentives. Oppenheimer’s $3.2 million state grant came with a job-retention commitment. Smaller firms won’t see grants of that size, but it’s worth asking a broker or the city’s economic development agencies what programs apply to your industry and borough before you sign.

The Bigger Picture

The move keeps a 145-year-old Wall Street firm downtown, and it’s another sign that landlords in Lower Manhattan are willing to spend to fill large blocks of space. For smaller companies, the lesson is in the fine print: the concessions are there for tenants who ask, and the best time to ask is before you sign.

Entrepreneurs Of New York is an independent publication and is not affiliated with Oppenheimer, RXR or JLL. This article is for general information and is not legal or real estate advice.