In order for Scott Rechler to succeed at overhauling the recently-leased 75 Rockefeller Plaza, his company, RXR Realty, will need to take in at least $80 a square foot, sources told the Wall Street Journal. There’s just one catch: In the fourth quarter of 2012, the average office rent in the Rockefeller Center area was $71.26 per square foot. RXR, which committed to lease the entire building for a 99-year term at an estimated cost of $250 million, has also planned a $250 million gut renovation of the property.
The 33-story tower will be completely empty by 2014 when current tenant Time Warner’s lease at the building expires. Rechler is confident that new tenants will fill the property and predicts they will be willing to pay more than $100 a square foot for spaces in the premiere sections of the building.
“We’re always looking for diamonds in the rough, and this is one we can polish up,” Rechler said.
Whether Rechler’s plan will succeed remains to be seen. RXR’s planned renovations for the building are expected to be completed in the third quarter of 2013, and there is no way of knowing what the market will look like. Even though the area around Rockefeller Center had a vacancy rate of 10.8 percent in the fourth quarter of 2012, Rechler is optimistic that the market will have recovered by the time the upgrade to the building is complete.
“In that time frame we think there’s going to be a tremendous amount of demand,” Rechler said. [WSJ]—Evan Bleier