The Real Deal New York

CBRE wins assignment to lease 550 Madison: sources

Team of Tighe, Gottlieb and Fiddle will bring 850K sf at Sony Building to market

July 25, 2016 01:30PM
By Rich Bockmann and Mark Maurer

From left: Hutham Olayan, the Sony Building at 550 Madison Avenue and CBRE’s Mary Ann Tighe

About three months after negotiating a blockbuster deal to buy the former Sony Building for $1.4 billion, Olayan America has tapped a team at CBRE to bring the building’s 850,000 square feet of office space to market, sources told The Real Deal.

Save for a lease AT&T negotiated with Sony in 1992, this is the first time space in the building is being marketed to office tenants.

A team led by Mary Ann Tighe, Scott Gottlieb and Howard Fiddle will spearhead the leasing effort at the 37-story building, sources said. The former owners, the Chetrit Group TRData LogoTINY and David Bistricer’s Clipper Equity, had planned to convert the upper floors of the building into a luxury condominiums designed by Robert A.M. Stern with a projected sellout of $1.9 billion. The sponsors had inked a deal with a high-end hotel brand to occupy the remaining space, but that lease was torn up with the building’s sale, sources said, leaving the full building available for office tenants.

Representatives for CBRE and Olayan declined to comment.

The CBRE team beat out a field of brokers from competing firms who pitched for the plum assignment ever since Olayan, a division of the Saudi conglomerate Olayan Group, entered contract to buy the property in April.

It wasn’t clear when the property will be available for occupancy. Because the building was owner-occupied since it opened in 1984 – first by AT&T and then by Sony – sources speculate that it has been maintained in good condition. It’s not clear what, if any, construction took place as part of the scrapped conversion plans.

The building has apparently drawn serious interest from at least one tenant. The international auction house Sotheby’s, currently headquartered in 490,000 square feet at 1334 York Avenue, was reportedly considering the building as the location of a new home earlier this summer.

Technically, the property lies within the Fifth/Madison office corridor, where average asking rents are in the low $80s per square foot, according to CBRE. But it’s right on the cusp of the pricier Plaza District, where average rents hit around $130 per square foot. It’s likely that CBRE will position it as part of the latter.

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