The Real Deal New York

JPMorgan to buy 50K sf of air rights — and maybe 505K more for 270 Park Avenue

Bank agreed to pay $20.7M to St. Bart's
By Kathryn Brenzel | June 28, 2018 08:47AM

270 Park Avenue and St. Bart’s at 325 Park Avenue (Credit: Curbed NY and Wikipedia)

JPMorgan Chase has agreed to buy 50,000 square feet of air rights from St. Bartholomew’s Church but is leaving the door open to buy up to 505,000 square feet more for $157.8 million.

The bank plans to pay $20.7 million for the initial installment of rights, according to a petition filed in state Supreme Court on Wednesday. JPMorgan has agreed to pay $15.6 million for the rights, as well as $3.1 million for public contributions that are required by recent rezoning legislation. The bank has also agreed to pay up to $2 million in closing and related costs.

As part of the agreement, JPMorgan has the option to eventually buy all but 20,000 square feet of the church’s remaining air rights. The bank has until February 28, 2019, to decide whether to buy more.

The initial air rights may be used to build JPMorgan’s new headquarters at 270 Park Avenue, a 70-story tower that is expected to span 2.5 million square feet. The bank is demolishing its current headquarters — formerly known as the Union Carbide Building — to make way for the new project. The petition notes that the bank can use these air rights at the Park Avenue tower or at “another qualifying” site. But if the bank buys additional rights from St. Bart’s, those must be used for the Park Avenue tower, according to the court documents.

The Park Avenue building will be the first to take advantage of the rezoning of Midtown East approved last August, which allows property owners to build larger office buildings in the district if they help pay for infrastructure and other public projects in the district. One option is to buy from a pool of 3.6 million square feet of air rights in the district. Under the rezoning, either 20 percent of the value of such air rights sales or $61.49 per square foot — whichever is greater — must be contributed to a “public realm improvement fund.”

For the deal with St. Bart’s, 20 percent — $3.1 million — will be dedicated to the fund, since JPMorgan plans to pay $312.50 per square foot (making the 20 percent option the larger of the two). The price is slightly higher than what the Real Estate Board of New York and others argued was a potentially prohibitively high floor price — initially proposed at $393, but now $307.45 per square foot — for the air rights.

JPMorgan has also agreed to pay a $3 million fee to hold onto its option to buy additional rights from the church. The fee will count toward its purchase of more air rights if the bank purchases 300,000 square feet or more.

In March, the New York Times reported that JPMorgan agreed to buy 680,000 square feet of air rights from the owners of Grand Central Terminal, as well as 100,000 square feet of air rights from St. Bart’s and possibly more from another religious institution.

Representatives for JPMorgan declined to comment on any of the deals.

In the petition filed in state court, the church notes that an appraiser had valued the air rights at $350 per square foot — but such a deal assumed that the seller would be on the hook for the 20 percent contribution to the public realm improvement fund. The church notes that it nets more under its current deal with JPMorgan.

The sale needs approval from the Landmark Preservation Commission, City Planning Commission and the court. The church expects the deal to close by 2019.