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  #1  
Old Posted Jan 28, 2020, 10:27 PM
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Top 50 US Office Deals in 2019

Lots of money traded hands last year




https://www.commercialcafe.com/blog/...ce-sales-2019/
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Old Posted Jan 28, 2020, 10:59 PM
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The price of the Coca-Cola Building can't just be for the existing asset can it? It's not very big, and at a 4% cap rate and 250,000 SF they'd have to be charging ~$150/SF net.

I don't know how heritage protection works in NYC, would they be allowed to build high-rise residential on top?
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Old Posted Jan 28, 2020, 11:04 PM
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I don't know how heritage protection works in NYC, would they be allowed to build high-rise residential on top?
Yes but if the building is protected, they would have to get approval from the land mark commission. They have granted approval on many projects but some times, they will get denied. All depends on the scope of the project, design, to what extent the alteration or conversion or addition will impact the original land marked property/parcel. Cases will vary, with length of determination ranging from a month to a few months.

The way it works, if a building is not land marked, its chop-chop square time for the tower/structure, even if its a beauty. See the Bancroft Building. That was demolished. Shame, but it is what it is.



RIP 1896-2015


Credit: Hannah Frishberg
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Old Posted Jan 29, 2020, 1:15 AM
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Originally Posted by suburbanite View Post
The price of the Coca-Cola Building can't just be for the existing asset can it? It's not very big, and at a 4% cap rate and 250,000 SF they'd have to be charging ~$150/SF net.

I don't know how heritage protection works in NYC, would they be allowed to build high-rise residential on top?
It's for the asset. The structure is landmarked. No way could they build on top, except for maybe a small landmarks-sanctioned penthouse hidden from the street.

Most Midtown Class A buildings get north of $100 psf, and the lower (retail) floors probably get (blended) like $1,000 psf (so ground floor much higher). And these types of buildings aren't bought for amazing returns; they're a safe place for jittery money.
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Old Posted Jan 29, 2020, 1:24 AM
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^^^^

They would have to get approval in the hypothetical scenario that they want to build a top of it or modify it to do so. Even if a structure is land marked, does not mean that it won't ever be developed or altered. We've seen this in the past. Assuming the engineering protocols are in place as well.

So long as the proper channels are followed, and proper approvals or even recommendations are made, than in some cases, development will occur.

At least within the 5 boroughs. Other cities may have different protocols or stringent requirements.
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Old Posted Jan 29, 2020, 1:34 AM
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Hopefully 330 Madison on that list gets redeveloped. Vornado was bought out on that parcel originally. I'd keep a long term eye on that parcel, prime location for a super tall commanding great $/sq-ft. They had a renovation about 9 years ago, but just something to keep tabs on for the future. Its an eye sore that needs to go.
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Old Posted Jan 29, 2020, 2:02 AM
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It's for the asset. The structure is landmarked. No way could they build on top, except for maybe a small landmarks-sanctioned penthouse hidden from the street.

Most Midtown Class A buildings get north of $100 psf, and the lower (retail) floors probably get (blended) like $1,000 psf (so ground floor much higher). And these types of buildings aren't bought for amazing returns; they're a safe place for jittery money.
I've looked at some prospective Manhattan purchases but ~$3,000 psf still seems insane to me. It doesn't even look like it's fully leased and that vacancy had to be priced into the first $909 million sale. Basically implying it's a billion dollar building at full occupancy!

I know Manhattan office leasing is tightly held by traditional brokerages so I don't really trust any public online listings, but the one with recent activity shows a decent chunk of vacant space marketed at $90 psf. There must be a much higher proportion of retail space than initially appears since the valuation is closer to what I saw for the Saks flagship store.
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Old Posted Jan 29, 2020, 2:05 AM
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Originally Posted by chris08876 View Post
Hopefully 330 Madison on that list gets redeveloped. Vornado was bought out on that parcel originally. I'd keep a long term eye on that parcel, prime location for a super tall commanding great $/sq-ft. They had a renovation about 9 years ago, but just something to keep tabs on for the future. Its an eye sore that needs to go.
Wasn't 330 Madison recently re-clad? That type of capex doesn't bode well for a redevelopment. At these prices it would be extremely hard to make the economics work for a redevelopment of a productive office asset, even if you are building supertall.
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Old Posted Jan 29, 2020, 2:12 AM
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Would depend on the needs. A 3-4 billion dollar tower is not within the realm of implausibility. 50 Hudson for example is close to 4 billion to develop factoring in hard/soft costs. It could end up costing more than 1 WTC.

Would it make it a little more challenging, yes, but for deep pockets, it really depends on the long term optics for the parcel. I don't expect it to be developed this cycle, but something in the long term, when the needs demand it, we shall see. Yeah it was renovated/re clad.

Midtown Rezoning will increase the chance of these large purchases for towers to be redeveloped. 270 Park is just the start. Check out 350 Park as well involving Vornado.

Acute thinking is not the game with office developments. Long-term optics are. Now for residential, of course this site would not make sense at all, but for office, yes.
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Old Posted Jan 29, 2020, 2:31 AM
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Wow I'm behind the times. I had no idea 270 Park was demolished for redevelopment. Does J.P. Morgan own the existing building though? Would be a bit different than an institutional owner buying a building, evicting the current tenants, and re-leasing the entirety of the space 4 years later. A lot more risk involved than a company personally developing their own consolidated office space. J.P. Morgan may be willing to pay a premium for that benefit regardless of whether it would be a profitable endeavor for a third-party.

Either way, knocking down a 50-story, million square foot office tower for redevelopment is mind-blowing. New York is insane.
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Old Posted Jan 29, 2020, 2:57 AM
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it's pretty incredible that almost 70% of the value of these transactions is in just THREE metros - new york, 6.9 billion, san francisco bay area, 5.8 billion, and seattle, 4.3 billion.
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Old Posted Jan 29, 2020, 3:06 AM
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Originally Posted by chris08876 View Post

RIP 1896-2015
The flippant demolition of irreplaceable gems in NYC seems rampant. In any other city people would be screaming bloody murder about this. And it's so swept under the rug, you can barely find information about these very recently extinct prominent buildings. In Chicago it would be front page news.
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Old Posted Jan 29, 2020, 3:24 AM
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Originally Posted by suburbanite View Post
Wow I'm behind the times. I had no idea 270 Park was demolished for redevelopment. Does J.P. Morgan own the existing building though? Would be a bit different than an institutional owner buying a building, evicting the current tenants, and re-leasing the entirety of the space 4 years later. A lot more risk involved than a company personally developing their own consolidated office space. J.P. Morgan may be willing to pay a premium for that benefit regardless of whether it would be a profitable endeavor for a third-party.
Yeah they own the site. Was their HQ for a while now, and now its being demolished. Largest skyscraper ever to be demolished. Employees were relocated throughout Manhattan and Brooklyn.

They have the deep pockets for it. Should be ready by 2024/2025. Its 100% happening.





Here was the demo as of last month. Tower with all of the lighting in the back.



270 Park Demo - 12-28-2019 by Christopher Estevez, on Flickr
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Old Posted Jan 29, 2020, 3:33 AM
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The flippant demolition of irreplaceable gems in NYC seems rampant. In any other city people would be screaming bloody murder about this. And it's so swept under the rug, you can barely find information about these very recently extinct prominent buildings. In Chicago it would be front page news.
Yeah some of them are just horrific acts. Even worse is when the replacement is garbage. IDK if you've seen it, but if you haven't seen the rendering for 29th and 5th, which is u/c for this parcel, don't look at the rendering if you want to remain happy. Its just a horrible design.

I think some of us are willing to compromise if the replacement is exquisite or equal in beauty, but sometimes the garbage that replaces it is the real ache.

Here's the rendering for those that want to ruin their sleep.




Here's a particularly vomit inducing rendering:

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  #15  
Old Posted Jan 29, 2020, 12:01 PM
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Originally Posted by suburbanite View Post
Wasn't 330 Madison recently re-clad? That type of capex doesn't bode well for a redevelopment. At these prices it would be extremely hard to make the economics work for a redevelopment of a productive office asset, even if you are building supertall.
330 Madison was marketed as a long-term redevelopment. I don't think it will be demolished anytime soon, but in the next 15-20 years, yeah, probably. It's one of the relatively few sites that can buy Grand Central air rights.

And you can spend a half-billion on renovations, like we're seeing now with 660 Fifth, but it doesn't fix the limitations of the midcentury towers. Low ceiling heights, limited space between floors and floorplates not ideal for modern-day workplace.

Pretty much any non-landmarked midcentury tower with Grand Central air rights potential will probably be gone or substantially redeveloped in the next few decades.
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Old Posted Jan 29, 2020, 12:33 PM
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I've looked at some prospective Manhattan purchases but ~$3,000 psf still seems insane to me. It doesn't even look like it's fully leased and that vacancy had to be priced into the first $909 million sale. Basically implying it's a billion dollar building at full occupancy!
The retail drives the valuation. Again, this is Fifth Ave, which, alongside Madison, generally has the most expensive retail space on the planet.

Inditex (Zara parent) paid $8,300 psf for their large retail condo at 660 Fifth Ave, which is two blocks away. And the east side of Fifth typically gets slightly higher rents than west side. So the Coca-Cola deal doesn't sound unreasonable.

Chanel, BTW, paid $25,000 psf for their SoHo retail condo, and $31,000 psf for their Madison Ave. retail condo, though these are smaller condos than the Zara condo. Prime Manhattan retail spaces have incredible valuations.

Bulgari, BTW, pays $5,500 psf to lease, just a block north of the Coca-Cola building. That's insane, and makes the retail condo sales look reasonable.
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Old Posted Jan 29, 2020, 12:43 PM
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Originally Posted by The North One View Post
The flippant demolition of irreplaceable gems in NYC seems rampant. In any other city people would be screaming bloody murder about this. And it's so swept under the rug, you can barely find information about these very recently extinct prominent buildings. In Chicago it would be front page news.
Actually, Chicago has very weak landmarks laws, and is much, much more pro-development than NYC.

Roughly half of Manhattan is landmarked, and therefore almost completely off limits to development and much of the remainder is downzoned or limited special district. NYC, alongside Bay Area, is probably the most anti-development major metro in North America. It's amazingly difficult to get stuff built, from endless lawsuits, to the nation's longest environmental review, to ridiculous community board micromanaging.

And yeah, probably no place has so much old stuff get redeveloped, but that's because no place has so much old stuff. Core NYC has an absolute crapload of late 19th/early 20th century building stock, and almost no parking lots or vacant lots, so if you want something new, something old will likely come down.
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  #18  
Old Posted Jan 29, 2020, 4:08 PM
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Originally Posted by Crawford View Post
It's for the asset. The structure is landmarked. No way could they build on top, except for maybe a small landmarks-sanctioned penthouse hidden from the street.
I just looked on the LPC website and it doesn't appear to be landmarked. Actually, surprisingly little on Fifth Avenue around there is landmarked.
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