$525M for a 94-Year-Old Building?Andy JoyntReal Estate EconomistProperty & Portfolio ResearchBoston

Even the industry can’t believe its own success. Last week’s Feedback Poll addressed the sensibility of a 94-year-old building going for $525 million–even if that building is the old New York Times Building, and even if it is in the heart of the Big Apple. Despite size and location, 66% of our readers said that the industry has finally jumped the shark on that one, while only 35% said it makes sense given market fundamentals. Commentator Joynt isn’t quite so quick to throw in the towel on the sizzling market. Here’s why:

“It certainly is getting very aggressive. From what I understand, Tishman Speyer was pleased to get this price. I think they were looking to get about $500 million. Africa Israel also saw it as a great opportunity, and I’m sure they’ve been studying the outlook for the New York market. We tend to agree that, given the direction this market is headed, if you do the renovations right, you could realize a good return on the investment.

“At first glance the price seems steep for a 94-year-old building, but given the way the market pricing has been moving, it seems pretty appropriate. We’ve thought about this transaction, and we think it looks like a win/win.

“When I look at this market and I look at the fundamentals, I see things continuing to improve. So it would follow logically that the pricing would remain aggressive since the fundamentals picture looks very solid going forward, for Midtown North specifically and for the Manhattan office market in general.”

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