Blood Center Lines Up New Office Space, but Deals Are Being Held Up by Fees

In mid-June, the former Cushman & Wakefield developer said he had acquired the leasehold on the four-story, 101 Fifth Avenue space. And he explained why the facility on Madison Avenue would be home to the family-owned blood bank.

“I realize I sound more cynical than optimistic,” Mr. Lesperance told the New York Blood Center, or NYBC, on June 17, 2019. “But, hey, I have an oath to protect the citizens of New York City. Our data collection efforts are scaled by our ability to collect blood in a safe, secure, and reliable manner. It will be a home run for the NYBC.”

The response was greeted with confusion and heartburn from tenants of the building, many of whom had received emails from the Blood Center over the previous months. By June 22, however, the office believed they had found more solid footing. The Blood Center’s “sole” representative at the office, Krista Mahoney, had agreed in writing to pay $25 per square foot in rent for the building.

But on June 24, the blood center’s lawyers sent Ms. Mahoney a cease-and-desist letter demanding that she cancel any “pledges” that she had made with the building’s owner, Cowen Properties, to pay the stipulated rent. The blood center also reminded her that the renewal agreements signed with the tenants in the building give no such agreement.

(What that says about the lease is not clear, since it is not in writing. Two people with knowledge of the situation said that management at the Blood Center had not reached out to them with the correct language of the lease agreements.)

The Blood Center and Cowen Properties would not comment on the situation, but requests for comment were relayed to Mr. Lesperance. In a phone call on Sunday, Mr. Lesperance said that he was surprised that the Blood Center wasn’t seeing the full value of the property.

“We gave them the right of first refusal,” he said. “And they’re the only potential occupant. Even though it’s a big leasehold, we felt it was worth it to agree to something that they hadn’t already agreed to. We still feel that we had the right to negotiate.”

He also said that the agreement would continue to pay $25 a square foot in rent, regardless of whether the Blood Center became a tenant. He referred to the $25-per-square-foot arrangement as a “backstop.”

Now, the Blood Center finds itself in the uncomfortable position of potentially losing a significant revenue stream. Just as it began to grow its practice back in 2015 with the opening of its second New York office at 980 Madison Ave., the Blood Center needed new blood to fund that investment. The New York Blood Center supplies blood to the city’s seven boroughs, from Staten Island to Long Island, in addition to Long Island University Medical Center, Beth Israel Medical Center, St. Luke’s Roosevelt Hospital, New York Presbyterian Hospital and New York-Presbyterian/Weill Cornell.

While the Blood Center would have preferred to stay at the Manhattan building, it wouldn’t lose out completely. The Blood Center was able to secure a 15-year extension on the lease at 980 Madison Ave. That space, it says, is leased at $50 per square foot.

So the Blood Center doesn’t have to scrounge for space as easily. And it has opened three locations in Manhattan during the past three years. It also provides blood in Brooklyn and Queens.

The Blood Center will be able to hold off on pulling out from the Manhattan building while it continues to negotiate for better terms from the owners. When asked, Mr. Lesperance would not speculate on what an updated deal might look like, but it seems likely that the Blood Center will find itself in a stronger position if it begins by negotiating for higher rent.

But if the Blood Center can’t find any new office space, it may have to reduce the hours it operates in Manhattan, or even sell the New York Blood Center name.

“We are considering all options,” Mr. Lesperance said. “It’s painful, especially in this year.”

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