Boston Properties Inc, the biggest US office landlord, plans to suspend construction of a skyscraper at 250 West 55th Street in Manhattan after a law firm abandoned plans to lease space there, said an agency report.
The law firm informed Boston Properties that it could not proceed on those terms, thereby rendering the project economically infeasible in today's environment, the company said yesterday.
Office building owners are being battered by the US recession, with the 14-member Bloomberg Office REIT Index losing 51 per cent in the past year. Manhattan office vacancies rose to 7.6 per cent in the fourth quarter, the highest since 2004, broker CB Richard Ellis Group Inc said last month.
Lending has also dried up as financial companies have taken more than $1 trillion (Dh3.67trn) of writedowns and credit-market losses.
A completed building on that site would have fetched $1,500 a square foot during the peak of the real estate market in 2007. That would give the tower a value of $1.5 billion and make it one of the most expensive in the city. The one million square-foot tower Boston Properties was building was scheduled for completion in 2011. Construction of the foundations is "well under way" and they will be completed, the company said.
Boston Properties said it expects to suspend its capital commitments by about $450 million through 2011 and is evaluating how the tower decision will affect earnings.
The company said last week that it had been negotiating with a top law firm and reached agreement on financial terms. It did not name the firm.