The Real Deal New York

Vornado buys Herald Sq. Old Navy for $355M: sources

Deal with Starwood and Crown expands REIT's dominion on 34th Street
By Adam Pincus | June 02, 2015 04:41PM

Vornado Realty Trust just closed on the $355 million acquisition of the Old Navy building in Herald Square, The Real Deal has learned, just over a year after a partnership between Starwood Capital Group and Crown Acquisitions bought it for $252 million.

With the deal for the three-story, 78,000-square-foot building at 144-150 West 34th Street, the Steven Roth-led real estate investment trust gains control of another prime retail property in a neighborhood where it has been assembling assets for decades. The site on which the property sits could be redeveloped into a 300,000-square-foot retail and hotel tower, using unused air rights, according to sources.

Old Navy has about five years remaining on its lease, which industry insiders described as far below market-rate. Average ground-floor rents in the area hit $1,000 per square foot for the first time this spring, a report from the Real Estate Board of New York released in May shows. Retailers have been bullish on the area as the local anchor, Macy’s, has seen its annual sales surge from $600 million to $1 billion over the past five years, one industry source said.

Eastdil Secured’s Adam Spies and Doug Harmon represented both parties in the deal. They declined to comment, as did representatives for Crown, which is controlled by the Chera family. Representatives for Vornado and Starwood couldn’t be reached.

“Vornado owns over six million square feet in the 34th Street district,” said Lisa Rosenthal, a broker with Lansco who was not involved in the deal. “This is just them consolidating that. Now they can really dictate the destiny of the district.”