Only buildings with top tenants are selling in this unicorn market
Tariff talk, interest rates and multi-family foreclosures are weighing down commercial real estate sales. But it's not all doom and gloom. Strong office and retail leasing are boosting select Manhattan building values creating a unicorn market for unique properties.
In fact, Avison Young counted 84 sales transactions in Manhattan south of 96th Street valued at $5 million and up (retail sales above $1 million) in just the first quarter of the year. The total value of those was $2.7 billion and included 28 residential sales worth $440 million.
'Rent spikes around Grand Central [Terminal] helped us trade 320 Park Ave. in December,' said Andrew Scandalios of JLL about one office stake sale.
5 Back in December, a majority stake in 320 Park sold for $506 million.
Christopher Sadowski
That's when investor Munich Re bought the remaining 75% stake in that Park Avenue building from Mutual of America for $506.25 million — thus revaluing the tower at $675 million.
The Grand Central area boom is now poised for Savills to help Cooper Union cut a new lease with a new operator for the Chrysler Building.
At 590 Madison Ave., leases by LVMH and Apollo Global Management boosted efforts by Eastdil to sell the trophy tower being purchased by Scott Rechler's RXR for a price expected to reach $1.1 billion.
5 Retailer Ralph Lauren just paid $132 million for its store space at 109 Prince St.
Bloomberg via Getty Images
'People understand what a good idea it is to own, and not just the best, but the best of the rest,' said Will Silverman of Eastdil who marketed 590 Madison. The sale of the tower by STRS Ohio also includes the adjacent land under 8 and 9 E. 56th St. which is long-term leased by the Trump Organization and currently subleased to LVMH.
And determined not to lose its retail space in Soho to a competitor, Ralph Lauren just paid $132 million to buy a 9,909-square-foot, multi-level space at 109 Prince St. that it had rented since 1999. It was represented by Newmark.
There's even buyer interest in lower-occupancy office buildings, which are being eyed for residential conversion. Real estate investor David Werner, for instance, is buying 5 Hanover Square in the Financial District for a residential transformation. The building was marketed by Doug Middleton of CBRE for sellers CIM — but at pricing, that's roughly half of the $104 million CIM paid.
5 300 E. 42nd St. will sport 132 rentals.
Steve Cuozzo
Those office-to-residential conversions have a buoying effect on office leasing as they remove square feet from the vacancy stats while forcing tenants to fill other buildings.
Another office building at 300 E. 42nd St. at Second Avenue will eventually house 132 rental apartments. Werner picked it up $52 million out of foreclosure, keeping the retail spaces and flipping the upper floors to CSC Real Estate for the same $52 million. CSC, a Mexican company with other New York investments, will now use one of the city's new affordable programs to skip real estate taxes while undertaking the conversion (and preserving a few office tenants).
'This market is going to have legs, and we have seen how appreciation will kick in when we get distress out of the pipeline.' Adelaide Polsinelli of Compass
'We are slowly starting to see the foreign groups sniff around,' said investment broker Middleton, pointing to Canadians, Japanese and even Australian groups. They're attracted to the relative safety of US real estate.
'People are very fearful of the [stock] market and real estate has a smoother, long-term view and are more stable,' said Woody Heller of Branton Real Estate.
Large existing residential towers are also trading — such as Stefan Soloviev's Rivers Bend at 501 E. 87th St., which has 179 apartments. It sold to A&E Real Estate for $116.5 million in March.
Meanwhile, the luxury rental apartment building at 800 Fifth Ave. is in contract for roughly $800 million. It's being sold by Eliot Spitzer and Winter Properties through Newmark to the Naftali Group.
5 560 W. 43rd St. (center left) has 418 fair-market rentals.
Freelance
On the western end of town at 560 W. 43rd St., the 418-unit all fair-market rental apartment building, Riverbank West is being sold through JLL for roughly $250 million. Another 225-unit apartment building at 515 W. 38th St., known as Henry Hall, is also on the market with JLL.
But building hunters who can't find unicorns have another target: foreclosures. There's plenty of them. RXR picked up the office building at 340 Madison Ave. in 2010 for $570 million. But it was just foreclosed on for the $161.3 million left on its $315 million mortgage with Mass Mutual — which likes to hold and operate. The building is on a ground lease that can be extended to 2186.
And at 135 E. 57th St. — Charles Cohen's former office building —negotiations on behalf of the landowners are now underway via JLL with a local operator for a luxury residential rental.
5 Outside the landmarked Scribner's Building on Fifth.
Lizzy Snaps Sullivan
The landmarked Scribner's Building at 597 Fifth Ave. along with the adjacent address, 3 E. 48th St., were taken back by the lender for its lien of $140.4 million.
The two had been purchased for $108.5 million in 2011 when strong retail and offices leases were in place.
Nearby, the Friars Club building at 57 E. 55th St. is being sold by its lender through Bob Knakal's BKRE, while its memorabilia will be auctioned separately.
'This market is going to have legs, and we have seen how appreciation will kick in when we get distress out of the pipeline,' said Adelaide Polsinelli of Compass.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
26 minutes ago
- Yahoo
This 35-year-old left the US for India to start a ‘Cali-style' burritos business — now it brings in $23M/year
Introducing burritos to the land of biryani is a genuinely unconventional business idea. Yet, this experiment has turned into a massive success for 35-year-old American entrepreneur Bert Mueller. In a recent interview with CNBC Make It, the young entrepreneur described how he discovered that Mexican cuisine was a perfect match for the Indian palate, which convinced him to launch California Burrito, a fast-casual Southern California-style restaurant, in 2012. Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) The company now has 103 locations across the country and generates $23 million in annual revenue. California Burrito's rise holds three powerful lessons every entrepreneur and investor should take notes on. Here's the secret sauce. Mueller told CNBC that he first visited India as a foreign student. In 2021, just 46,000 international students were enrolled in Indian colleges, according to the British Council, making it one of the less obvious choices for studying abroad. But for Mueller, that was part of the appeal. 'I wanted to go somewhere that was radically different than the U.S. and so I decided that India was the place to be given that, first off, I loved Indian food and second, people spoke English,' he told CNBC, calling the decision 'contrarian.' This contrarian mindset has helped many investors and entrepreneurs uncover hidden gems and rare opportunities in unlikely places. By keeping an open mind and considering unconventional options, you could boost your chances of finding a lucrative niche that few others have considered. Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says — and that 'anyone' can do it Another secret to Mueller's success is his cautious approach to building a business. He told CNBC that his initial estimate for startup costs was $100,000, but he raised nearly $250,000 from friends and family 'to be careful.' These additional funds gave him and his team much-needed flexibility to launch California Burritos and mitigate the risks of introducing an unproven concept to a new market. This approach mirrors Warren Buffett's investing principle of working with a 'margin of safety.' No one can predict the future with precision, so by raising more funds than you need or investing at a lower valuation than you think is fair could be the best way to mitigate unforeseen risks. Mueller admitted that his journey had its fair share of setbacks. He told CNBC that the first area manager he hired turned out to be corrupt and was colluding with vendors for kickbacks. The betrayal could have derailed the entire venture while it was still in its infancy, but Mueller says giving up wasn't an option. 'My mom is a marathon runner, and I have that trait in me,' he said. 'You have to keep going until you've reached the finish line. And I never felt like quitting.' According to psychologist Angela Duckworth, this ability to deal with failure and persevere is a key trait of high achievers in various fields. Her research indicates that grit — the ability to persevere despite challenges — is a greater predictor of success than social intelligence, IQ or even talent. Similarly, a study published in the Journal of Global Entrepreneurship Research found that undergraduate students with higher levels of grit had greater intentions of launching their own business after graduation. Just like Mueller, if you're considering a new venture or a new opportunity, the ability to deal with setbacks and keep pushing forward despite adversity is a key skill you'll need to develop. Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you'll need a substantial stash of savings in retirement Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Like what you read? Join 200,000+ readers and get the best of Moneywise straight to your inbox every week. This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Supreme Court rejects Mexico's lawsuit against U.S. gun makers
WASHINGTON — The Supreme Court on Thursday threw out the Mexican government's lawsuit against U.S. firearms manufacturers accusing them of aiding and abetting gun violence. The court ruled unanimously that the lawsuit is barred by a 2005 federal law that shields gun companies from legal liability. Liberal Justice Elena Kagan, who wrote the opinion, acknowledged the gun violence problem, but said Mexico had failed to make allegations that would surmount those liability protections in claiming the companies aided and abetted the unlawful sale of guns. "The question presented is whether Mexico's complaint plausibly pleads that conduct. We conclude it does not," she wrote. The 2021 lawsuit accused Smith & Wesson, Colt and other companies of deliberately selling guns to dealers who sell products that are frequently recovered at Mexican crime scenes. The Mexican government said the aiding and abetting allegations meant that the companies were not protected by the federal immunity shield, called the Protection of Lawful Commerce in Arms Act. Mexico was seeking up to $10 billion in damages. The case at the Supreme Court involved two companies — Smith & Wesson and Interstate Arms. Other manufacturers, including Glock and Colt, successfully had claims against them tossed out. A federal judge initially ruled for the manufacturers, but the Boston-based 1st U.S. Circuit Court of Appeals revived the case last year, saying the liability shield did not extend to Mexico's specific claims. The case reached the Supreme Court following increased tensions between American and Mexican leaders after the election of President Donald Trump, who has cited drug trafficking and gang violence in Mexico amid his crackdown on undocumented immigrants. Democrats in Congress have introduced legislation intended to reduce the flow of guns across the border, which they estimate to total at least 200,000 a year. This article was originally published on
Yahoo
2 hours ago
- Yahoo
US Supreme Court rejects Mexican govt suit against gun makers
The US Supreme Court on Thursday dismissed a $10 billion lawsuit by the Mexican government accusing American gun manufacturers of fueling drug cartel violence. In a unanimous 9-0 opinion, the top court said a federal law -- the Protection of Lawful Commerce in Arms Act (PLCAA) -- shields the gun makers from liability. "Mexico's lead claim -- that the manufacturers elect to sell guns to, among others, known rogue dealers -- fails to clear that bar," said Justice Elena Kagan, the author of the opinion. "Mexico's complaint does not plausibly allege that the defendant manufacturers aided and abetted gun dealers' unlawful sales of firearms to Mexican traffickers." Gun maker Smith & Wesson and gun distributor Interstate Arms had sought dismissal of the Mexican government's suit, which has been winding its way through US courts since 2021. Mexico, which is under mounting pressure from President Donald Trump to curb drug trafficking, had accused the firearms makers of "aiding and abetting" illegal gun sales because they allegedly know that some of their products were being unlawfully sold to the drug cartels. A federal judge tossed out the case in 2022 saying Mexico's claims failed to overcome the protection of the PLCAA, which was passed by Congress in 2005 and shields US gunmakers from liability for criminals misusing their products. An appeals court revived the case citing an exception to the law, and Smith & Wesson and Interstate Arms sought relief from the Supreme Court. A majority of the justices on the conservative-dominated top US court appeared to side with the firearms companies during more than 90 minutes of oral arguments in March. Mexico maintains that 70-90 percent of the weapons recovered at crime scenes have been trafficked from the United States. The US southern neighbor tightly controls firearms sales, making them practically impossible to obtain legally. Even so, drug-related violence has seen more than 480,000 people killed in Mexico since the government deployed the army to combat trafficking in 2006, according to official figures. Catherine Stetson, representing the Mexican government before the Supreme Court, said 600,000 US guns are illegally trafficked into Mexico every year and some companies are even "designing certain guns to target the Mexican market," giving them Spanish names such as "El Jefe." The case comes against a backdrop of US-Mexico trade tensions with Trump threatening tariffs on imports from Mexico, citing a lack of progress in stemming the flow of drugs such as fentanyl into the United States. cl/md
