Your article was successfully shared with the contacts you provided.
NEW YORK CITY—When the Chrysler Building at 405 Lexington Ave. was last sold in 2008, Tishman Speyer Properties maintained a 10% interest but sold a 90% share to the Abu Dhabi Investment Council for $800 million. But will the sellers now be able to command that same price tag or a higher one? They retained CBRE to put the Art Deco landmark up for sale, as first reported in the Wall Street Journal on Wednesday. The brokerage confirmed with GlobeSt.com the “on sale” status of the building.
The nearly 1.2 million square-foot, 77-floor office tower was originally built in 1930, according to Real Capital Analytics. For additional insight, GlobeSt.com checked in with Woody Heller, vice chairman and co-head of the capital markets group of Savills Studley in New York City. Having structured the sale of the notes and mortgage encumbering the Chrysler Building, he knows the property as real estate. Heller says the building’s stature should make its sale “infinitely easier.” He points out, “lots of buyers want globally recognized iconic buildings” and that the building garners attention.
However, older buildings require greater repairs. The Wall Street Journal reported Tishman Speyer invested significant capital improvements in the building back in 1997. The publication also noted that the Chrysler Building faces rising ground lease costs because it stands on land owned by Cooper Union. It noted the building owners paid $7.75 million for the ground lease in 2017 but that amount escalated to $32.5 million in 2018.
“Leasehold interests are not uncommon,” says Heller. “But typically the ground rent is a lower percentage of the building’s overall income.”
Unlike the Empire State Building, its peer, rival, and architectural frenemy, which has an observation deck and charges admissions, there are no tickets to buy at the Chrysler Building. The public can enter, commuting from the MTA or Metro-North at Grand Central Terminal, and walk through its magnificent lobby for free. It’s an office building where people come to work—perhaps one of most basic symbolic representations of New York.
Betsy Kim is the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!
Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
Exclusive discounts on ALM and GlobeSt events.
Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.