NEW YORK CITY-Taconic Investment Partners and Square Mile Capital have closed on the acquisition of a commercial condominium interest encompassing 1.1 million sf of space at the 32-story, 1.2-million-sf office building, 375 Pearl St., from Verizon. The price was $172.5 million.

The joint venture plans an extensive redevelopment of the building into a modern, multitenant office tower. The renovations will include a new facade to open up the spectacular views, a new lobby, a new HVAC system, new bathrooms and a reconfiguration of the core to include the addition of up to six new elevators, says Ari Shalam, SVP and director of acquisitions for Taconic, in a prepared statement. Those involved in the deal were unable to reveal to how the redevelopment might change asking rents for the building, nor were they able to provide anything further at this time.

The new owners have hired a notable leasing and development team, including: CB Richard Ellis, led by Robert Alexander, Robert Stillman and Brian Gell, for leasing; Cook + Fox, as project architect; Severud Associates as structural engineer; Jaros Baum & Bolles as mechanical engineer; Tishman Interiors Corp., as general contractor; and Israel Berger & Associates Inc., as curtain wall consultant.

Deborah Jackson, executive managing director of Weiser Realty Advisors LLC, who was not involved in the deal, tells that this particular building is quite interesting. “Given its location, it has worked for Verizon. While it is our understanding that it is the intention of the new owners to renovate and achieve higher revenue, one needs to question which occupants will be attracted to the building.”

She continues that “true, there is a shortage of large blocks of space in the area, but there is also psychological barriers to certain locations,” however she adds that with that said, a decade ago people would have said that about Chelsea. Rents in the general area vary widely–about $37-to-$44 per sf, she explains, however, they can be higher. “In brief, it will be key for Taconic to get the first tenant beyond Verizon-either a large user or a big name–or preferably one that is both. With the large space that it can offer and modern amenities, it would then be able to achieve rents that are probably above the average. The difficulty is getting the first user.”

“375 Pearl Street is an extraordinary offering for large tenants seeking big efficient floorplates in a class A tower,” says CBRE’s Bob Alexander in a prepared statement. “Taconic’s and Square Mile’s dynamic plans for the building will transform it into one of the largest blocks of contiguous available office space in a class A building in Manhattan, with floorplates of more than 37,000 sf, slab heights averaging 15 feet high, all new systems, and spectacular city views.”

The acquisition will give Taconic and Square Mile ownership of 29 out of the 32 floors in the building. Verizon will retain a condominium interest in three floors for its use. The building stands taller than 540 feet, and its 360-degree views of the city will be opened up upon completion of the proposed renovation. It is located at Pearl Street, in the City Hall submarket near the base of the Brooklyn Bridge.

The building was developed in the ’70s as part of a development agreement between New York Telephone Co. which is now Verizon, the New York City Educational Construction Fund, and the Board of Education, which provided for the development in conjunction with Bergtraum High School for Business Careers.

Taconic also recently bought and is renovating two large residential complexes in Brooklyn and the Bronx, is co-developer of the new luxury high-rise Caledonia condominium and rental development along the High Line in Manhattan. The company has also assembled land holdings in Coney Island for residential development and just completed a prime site in the Meatpacking district of Manhattan leased by Apple Computer.

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