A premier office asset that's struggled with occupancy has found a new landlord. Vornado Realty Trust has struck a deal to buy 623 Fifth Avenue in Midtown East, Manhattan, for $218 million, the company announced today.
The 382,500-square-foot building is known for its location above the Saks Fifth Avenue department store. The property, which was owned by Cohen Brothers Realty Corp., offers views of key Midtown monuments like St. Patrick’s Cathedral and Rockefeller Center.
However, the property has struggled, as of late, currently operating at 75 percent vacancy. With the purchase, Vornado is planning upgrades in hopes of attracting more tenants. Specifically, the REIT said it intends to "completely reposition and redevelop it into a premier, best-in-class, Class A boutique office building." Some features at 623 Fifth now include a sky-lobby, column-free extended HVAC, a loading dock and a messenger center.
The site's tenant roster currently includes Kaneka Americas Holding, HCL America and NWI Management, according to CompStak.
Additionally, the acquisition will add to Vornado's Manhattan portfolio.
"The fully transformed 623 Fifth Avenue building will complement Vornado’s nearby Plaza District and Park Avenue holdings of 280 Park Avenue, 350 Park Avenue, 595 Madison Avenue, 640 Fifth Avenue, 689 Fifth Avenue and 1290 Avenue of the Americas," the company said in a statement.
As of June 30, Vornado reported in its recent second-quarter earnings report that its New York office occupancy was 86.7 percent.
Moreover, Vornado has been busy with refinancing deals across CRE in Manhattan. This month, it got a new $120 million loan for its retail property, 4 Union Square South. In July, the company refinanced its 1.2 million square foot PENN 11 office for $450 million, after the asset recently underwent renovation. A month earlier, Vornado, along with its joint venture partner Stellar Management, struck a $675 million deal to refinance Independence Plaza, a residential property in Tribeca. Another involved Vornado's hotel property, Marriott Marquis, where it landed a $450 million loan, which is being used in part to redeem the company's preferred equity in the asset's JV.
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