NEW YORK CITY-A deal has been struck for RXR Realty to buy the gigantic Starrett Lehigh Building from Shorenstein Properties for about $900 million. Industry sources familiar with the deal confirm a report in Crain’s New York Business that the Long Island-based owner and developer is paying approximately $409 per square foot for the 2.3-million-square-foot office property at 601 W. 26th St.
Citing unnamed sources, Crain’s reported that RXR chairman Scott Rechler was drawn to the property because of the growth potential he sees in Midtown South. In December, the nearby 111 Eighth Ave. sold to Google for $1.8 billion, and the Related Cos. is poised to develop the space over the Metropolitan Transportation Authority’s Hudson Yards into a mixed-use mega-project farther west on the island.
With floorplates of up to 150,000 square feet, the property occupies more square footage on 20 floors than some office towers three times its height. Build in 1932 as a railroad freight terminal, 601 W. 26th underwent a $30-million renovation in the late 1990s after an investment group led by Shorenstein acquired it from Helmsley-Spear for $152 million.
Following its repositioning as an office property, the Starrett Lehigh Building initially attracted dot-com tenants. Today, its best-known tenant is Martha Stewart Living Omnimedia. Through spokesmen, RXR and Shorenstein declined comment on the Crain’s report.
In 2010, RXR made its first direct property investments in Manhattan since its formation in 2007. The company acquired a 49% interest in 340 Madison Ave. from the D.E. Shaw group, and later bought 1330 Ave. of the Americas for about $400 million, 18 months after the former Macklowe property was seized by mezzanine lender Otera Capital.
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