by Michael Stoler
September 8, 2005
All of a sudden, a number of prominent Fortune 100 companies are selling New
York real estate. JPMorganChase is shedding its real estate assets. Last
month, the bank entered a contract to sell the 23-story, 595,000-square-foot
office building at 522 Fifth Ave. to Stellar Management. Stellar had
previously purchased the land under the building in 2004. In May, the bank
sold three other office buildings, totaling 425,000 square feet, which had
served as the location of the bank's credit operations in Hicksville, Long
Island. Apollo Real Estate Advisors paid about $30 million for the property.
The bank is marketing for sale the 36-story, 663,000-square-foot building at
75 Wall St. The building was built by Barclays Bank in 1986 and sold to
Chase in the 1990s. According to industry sources, Chase purchased land
under the building last month from Barclays Bank. Industry leaders also
expect that later this year, when the sale of 75 Wall St. is completed,
Chase will begin marketing for sale the 22-story, 999,305-square-foot tower
at Four New York Plaza in Lower Manhattan.
On December 31, 1999, HSBC Bank USA purchased the assets of Republic
National Corporation, and became the owners of a number of prize properties
in the region. One of the locations, at West 42nd Street and Eighth Avenue,
had served as a branch of Crossland Savings Bank, which was acquired by the
bank in the 1990s. Earlier this summer, the bank sold the property, which
was converted into a Duane Reade store. The buyer, a partnership of Jeff
Sutton and Joe Cayre, paid $30 million for the site, which will probably be
developed into a mixed-use retail and residential tower. In May, HSBC sold
the landmark Williamsburg Savings Bank - the tallest building in Brooklyn,
located at 1 Hanson Place - to a partnership of the Dermot Company and
Canyon-Johnson Urban Funds. The partnership paid about $72 million, and
plans to convert the property into 216 luxury residential condominiums.
In May, Reckson Associates Realty entered a contract to buy the 50-story,
1.4 million-square-foot Citibank tower in Long Island City for $470 million.
Before the close of the sale, the bank signed a 15-year lease for 100% of
the tower for a net rent of about $22 a square foot. In September 2002,
Citigroup sold its 39-story tower at 399 Park Ave. to Boston Properties for
$1.06 billion, the largest real estate deal in America that year.
Last year, Verizon announced plans to sell corporate real estate in the
city. In March, Equity Office Properties Trust announced it had entered a
contract for the 42-story, 1.2 million square-foot Verizon building at 1095
Avenue of the Americas. Equity agreed to pay $505 million for about 1.03
million square feet, or 80% of the tower. After the sale, Verizon will still
own a condominium portion of the building that is about 200,000 square feet
in size. In April, Verizon sold a development site on West 42nd Street
between Eleventh and Twelfth avenues to the developer Joseph Moinian. Mr.
Moinian paid $120 million, or $200 a developable square foot, for the three
sites at 563 Eleventh Ave., 604 W. 43rd St., and 605 W. 43rd St., where he
is developing residential condominiums. Verizon is now marketing for sale a
47,000-square-foot lot at 555 W. 34th St. and 550 W. 35th St. in the rezoned
Hudson Yards. In May, the company sold its 27-story office building at 101
Willoughby St. in downtown Brooklyn. The new owners plan to convert the
tower into residential condominiums.
This summer, TIAA-CREF, sold four small office buildings that have a total
of 40,000 square feet of space at 116, 118, and 120 E. 55th St. and 119-121
E. 54th St. The State University of New York bought the property and will
use it to house a graduate school. In July 2004, TIAA-CREF sold two of its
buildings, which cover an entire block at 750 Third Ave. and 485 Lexington
Ave., and have about 1 million square feet of space, to a partnership of SL
Green Realty, the City Investment Fund, and the Witkoff Group for $480
MetLife, the country's biggest life insurer, bought the 58-story, 2.8
million-square-foot office building at 200 Park Ave. from Pan American
Airlines for $401 million in 1981. In April, MetLife entered a contract to
sell the building for $1.72 billion. The buyers are Tishman Speyer
Properties and its partners: the New York City Employees' Retirement System
and the New York City Teachers' Retirement System. The $1.72 billion
purchase price was the highest recorded price for an office building in
America, exceeding the $1.4 billion price paid by the Macklowe Organization
in September 2003 for the General Motors building at 767 Fifth Ave. During
the same month, MetLife sold its 1.4 million square-foot former headquarters
at One Madison Ave. to SL Green Realty for $918 million. In December 2003,
MetLife sold the adjacent building at 11 Madison Ave. to a partnership of
Zar Realty Management Corporation and Dave Werner. In July, MetLife entered
a contract to buy the 40-story, 522,346-square-foot building at 575 Fifth
Ave. from Sterling Equities, paying about $385 million.
New York Life Insurance Company owns several office and residential
properties in the tri-state region. Last month, a partnership of Richard
Kalikow's Manchester Real Estate and the O'Connor Partnership entered a
contract to buy the 19-story, 587-unit rental apartment building, the
Manhattan House, which occupies an entire block on East 66th Street and East
67th Street between Second and Third avenues. The partnership is paying
about $636 million to New York Life, which developed the residential
building in 1950.
According to industry sources, later this year, Sony will sell its 36-story,
700,000-square-foot headquarters at 550 Madison Ave. The tower was
originally built in 1982 to serve as the headquarters of AT&T, which net
leased the building to Sony in 1993.Two years ago, Sony bought the tower.
Industry leaders expect the building to fetch close to $360 million. Last
month, the $2.5 billion pension fund, CalSTERS, sold the 146,000-square-foot
tower that sits across the street from the Sony building at 551 Madison Ave.
The property sold for about $90 million.
These institutions and others are following the lead of property owners from
all around the world to capture record prices for New York real estate. In
many instances, these companies have consolidated operations and no longer
need the space. For others, executives and board members have taken the
initiative to seize the opportunity as well as increase the financial
strength of their company.
Mr. Stoler is a television
broadcaster and vice president at
First American Title Insurance Company
of New York. He can be reached at