Recapping The End-Of-Year Office Selling Spree
What You Need To Know
Just as expected, deals wrapped up before the holidays are beginning to file in. Perhaps less expected, many were sales of office buildings.
Those deals made up a large chunk of the $1.6B of office trades in the fourth quarter, double the dollar volume from the end of 2023, according to Avison Young data provided to Bisnow.
That figure doesn't even include the biggest year-end deal: RXR’s purchase of a 49% stake in the News Corp. building at 1211 Sixth Ave. from Ivanhoé Cambridge. The deal values the building at $1.2B — a 33% discount from its previous valuation. The partners plan to spend $300M to modernize the 1M SF building, on top of renovations that are already underway, according to a spokesperson.
Thanks to a recent lease extension, more than half of the building is occupied by Rupert Murdoch's media empire — including The Wall Street Journal, the New York Post and Fox News — through 2042. However, 600K SF will become available when Ropes & Gray departs to another RXR building, 1285 Sixth Ave., in 2028.
RXR is no stranger to buying in times of market downturn. Scott Rechler’s investments following the Global Financial Crisis are part of the reason his $19B portfolio exists today. And he has made it clear that he wants to replicate that strategy now, having launched a $1B fund to snap up Manhattan office towers in partnership with Ares Management Corp.
Williams Equities, which established itself by buying foreclosed properties during the Great Depression, is seemingly also looking for opportunity in Manhattan’s office sector. Last week, the firm announced that it acquired 470 Park Ave. S. for $147.5M, approximately $100M less than the building sold for in 2018.
In another deal that closed just as 2024 did, Haddad Brands bought 2 Park Ave. from Morgan Stanley for $360M. The clothing manufacturer will occupy a portion of the 1M SF building, which last sold for more than $500M.
The question is whether these purchases will pay off years from now.
Namdar Realty Group and Empire Capital thought that the time for opportunistic buying was 2021. It was then that the two went on an office shopping spree together.
Last week, they were forced to take a $22M loss by selling one of those purchases, 345 Seventh Ave., where the threat of foreclosure bore down on them.
The Katan Group, in partnership with Kohan Retail Investment Group and investor Ilya Mikhailov, paid $85M for the Midtown property and is considering converting it to residential use.
“This is the right time to invest in New York City,” Isaac Katan said in an emailed statement.
When I reached him over the phone, he declined to comment on any plans for future acquisitions.
— Sasha Jones
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What I Want To Know
Are you going to the hottest night in real estate, the Real Estate Board of New York’s annual gala, this week?
The event, which is in its 129th year, brings together New York City’s top real estate owners, developers, brokers and public officials to schmooze. It also recognizes industry leaders through an awards ceremony. Mayor Eric Adams and Gov. Kathy Hochul have spoken at the gala in recent years.
I’ll be there with my colleague Ciara Long and Bisnow Editor-in-Chief Mark Bonner. Join us for a quick interview on your plans for the year ahead — or just say hi!
First Look
The city has finally selected a team to redevelop the abandoned century-old Kingsbridge Armory.
Over two phases, Maddd Equities and Joy Construction plan to turn the 570K SF landmark into a mixed-use community facility and construct 450 permanently affordable rental units adjacent to the former military weapons site.
The project will be supported by a $200M investment from the city and state, along with additional funding from local and federal grants.
The redevelopment is expected to generate nearly $2.6B in economic impact over the next 30 years, creating over 3,000 construction jobs and 360 permanent jobs, according to an announcement by the city.
Since the armory was decommissioned in the 1990s, other redevelopment uses have been attempted, but none have succeeded. It has largely sat empty, with the exception of the occasional film shoot, such as for Amazon Prime’s series The Marvelous Mrs. Maisel.
Can I Give You My Number?
1 Million
The number of housing units Manhattan Mayor Eric Adams said he wants to create under “The Manhattan Plan.” Few details on the effort, which was announced during his State of the City address, were provided, outside of a proposal to build 2,000 units to replace the headquarters of the Department of Housing Preservation and Development at 100 Gold St. Other housing goals shared by Adams were for more residential development on city-owned sites, the creation of more family-sized units and new programs for unhoused New Yorkers.
They Said What?
“This is the eradication of what it means to be a New Yorker, to be an American,” New York Apartment Association CEO Kenny Burgos, said of costs accumulating for multifamily owners.
What I’m Looking Forward To
Drop The Hot Goss
The Slice is produced by Bisnow Senior New York City Reporter Sasha Jones and is edited by Deputy Managing Editor Ethan Rothstein. Got an answer to my questions or info that you think I’d be interested in? I’m always happy to chat, on or off the record. Reach me at sasha.jones@bisnow.com or @SashaJones.06 on Signal, an encrypted messaging app.