NEW YORK CITY—A partnership of General GrowthProperties and Jeffrey Sutton'sWharton Properties has made a pre-emptive strikeon a planned auction of the Crown Building at 730 Fifth Ave.,published reports say. Bloomberg reported Friday that thepartnership would pay $1.75 billion for the property, largely onthe strength of its retail space. The acquisition is believed toset a world record for a single office building at$4,490 per square foot.

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The New York Post reported Thursday that the390,000-square-foot trophy at the corner of 57th Street and Fifthgarnered worldwide interest after EastdilSecured's Doug Harmon and AdamSpies began marketing it earlier this month. However, GGPand Sutton moved quickly to acquire the property from theSpitzer and Winter families.

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Although primarily an office property, it's the approximately50,000 square feet of retail space along the world's most expensiveshopping corridor that gives the Crown Building its appeal. Itsretail tenants include jewelers Bulgari SpA and K. Mikimoto &Co.; its neighbors include Tiffany & Co., Louis Vuitton andBergdorf Goodman.

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Cited sources said to be familiar with the transaction,Bloomberg reported that most of the office and retail tenants at730 Fifth are paying rents well below the market. With about 90% ofits leases expire within seven years, there are opportunities toboost the property's cash flow, Bloomberg reported. Among itsoffice tenants are KKR, Apollo Global Management and men's designerErmenegildo Zegna.

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While Sutton and Wharton Properties have long been activeinvestors in Manhattan retail, for GGP urban properties are arelatively new emphasis. In July, SandeepMathrani, CEO of the nation's second-largest shoppingcenter owner, said urban storefronts “offer very compellingopportunities to create shareholder value.”

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The current ownership paid $93.6 million for the 25-story 730Fifth, then half-empty, in a 1991 court-ordered sale. ThePost reported that the property was once owned by Fernandoand Imelda Marcos before they were toppled in a Philippine militarycoup.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.