Shorenstein Properties is gunning for a hefty profit with its planned sale of 850 Third Avenue. The 614,000-square-foot office tower, which JLL recently began marketing, has a price tag of $450 to $500 million, The Real Deal has learned.
When Shorenstein’s Fund Nine bought the 21-story building as part of a portfolio in 2008, it was valued at just north of $300 million. TRD first reported that the property was hitting the market in March, but the price tag wasn’t revealed at the time.
If the recent past is any indication, however, reaching this target could be a challenge. A sales price of $500 million would translate to $814 per square foot. Aby Rosen’s RFR Realty wanted $800 per square foot for an office building 757 Third Avenue, located three blocks south of 850 Third. According to reports, the Canadian real estate firm Bentall Kennedy has agreed to buy Rosen’s property for $360 million, or around $720 per square foot.
Representatives for Shorenstein declined to comment, while JLL couldn’t be reached by press time. With the $500 million ask for 850 Third, and a corresponding cap rate of just above 3 percent, Shorenstein is likely aiming at potential buyers such as pension funds or other institutional investors who are content receiving lower returns in the short term.
Tenats at the property, located between 51st and 52nd streets, include media firm Discovery Communications, the City of New York and Radio One. The property was once part of the Equity Office portfolio Harry Macklowe bought for $7 billion in 2007 and then famously defaulted on after the market crashed. The portfolio was a central theme in “Liar’s Ball,” Vanity Fair contributing editor Vicky Ward’s book on the GM Building.