The Real Deal New York

Japanese investors bought $1.5B in NYC properties in past year

Mitsui Fudosan, Unizo leading investment at level not seen since 1990s

September 28, 2015 01:08PM

From left: Rendering of 525 West 52nd Street (credit: Handel), rendering of 425 Park Avenue (credit: Foster + Partners) and 370 Lexington Avenue

From left: Rendering of 525 West 52nd Street (credit: Handel Architects), rendering of 425 Park Avenue (credit: Foster + Partners) and 370 Lexington Avenue

Japanese investors are returning to New York’s commercial real estate market to an extent not seen since the country’s economic downturn of the 1990s, with Japan-based real estate companies having purchased $1.5 billion of property in the city in the past 12 months.

Deals like Unizo Holdings’ $247 million purchase of 370 Lexington Avenue, Tokyu Land Corp.’s acquisition of a stake in 425 Park Avenue and Mitsui Fudosan Group’s $259 million investment in Related Cos.’ 55 Hudson Yards are indicative of the trend, which display both the strength of the city’s real estate market and the return of Japanese buyers to New York.

It is a change of pace considering there was almost no Japanese real estate investment in the city until roughly three years ago, Okada & Co. president Christopher Okada told the Wall Street Journal. It also harks back to the 1980s, when a booming economy saw a broad range of Japanese banks and insurance companies enter the market.

But the nation’s economic downturn of the 1990s, known as the Lost Decade, took a toll on such investment. Mitsubishi Estate Co. suffered one of the largest losses with its stake in Rockefeller Center, handing the Midtown property over to lenders in 1995 after it filed for bankruptcy protection.

But Mitsubishi didn’t leave entirely – Rockefeller Group, a subsidiary of the company, is planning a number of ground-up projects in New York and New Jersey – and the firm has been joined by a wave of newer companies that have made Japan the fourth largest investor in Manhattan office space this year.

Mitsui Foduson also purchased a majority stake in Taconic Investment Partners’ ground-up rental development at 525 West 52nd Street, while Unizo paid $210 million in January for two office buildings near Madison Square Park and has spent $622 million on four buildings so far this year. [WSJ]Rey Mashayekhi