Renowned law firm Weil, Gotshal & Manges has been based in the General Motors Building on Fifth Avenue since the New York office tower opened in 1968. Over the decades, the firm has remained the dominant occupier of the property and continues to serve as the largest single tenant in the prestigious asset to this day.
Weil, Gotshal & Manges currently occupies a total area of 447,075 square feet. The existing lease secures a very long-term commitment for the owner, with the term running until August 2034. Such dimensions underline the considerable importance that major law firms hold for prime office properties in central locations.
Significant implications for securitisations
The financial significance of this tenancy became particularly evident when the $2.3 billion loan on the General Motors Building was securitised in 2017. At that time, payments from Weil, Gotshal & Manges accounted for 19.4 per cent of the property's total gross income. The cash flow from the firm thus provided a pivotal foundation for servicing the multi-billion-dollar debt obligation.
Developments around Weil are now drawing attention to the broader exposure of the legal sector within the commercial mortgage-backed securities (CMBS) segment. Combined, law firms underpin a substantial securitisation volume of $35.4 billion in the commercial mortgage debt market.
- —Property: General Motors Building on New York's Fifth Avenue since 1968
- —Leased space: 447,075 square feet with a lease term ending in August 2034
- —Income share: 19.4 per cent of gross revenue upon securitisation of the $2.3bn loan in 2017
- —Market relevance: $35.4 billion in CMBS exposure across the legal sector
Law firms have traditionally been regarded in the commercial property sector as high-credit covenants whose multi-year commitments provide stability for structured finance models. When fundamental shifts occur with such key tenants, this directly influences the risk assessment of CMBS tranches that are largely underpinned by these revenues.
