The Real Deal New York

Tishman Speyer near deal for leasehold on huge USPS facility

Developer plans to redevelop 600K sf across upper floors as Class A office space
By Mark Maurer | July 11, 2018 06:02PM

Rob Speyer and 341 Ninth Avenue (Credit: Getty Images)

Tishman Speyer is in advanced negotiations to acquire the 99-year leasehold for the upper floors of one of the largest U.S. Postal Service processing centers in the country, The Real Deal has learned.

The USPS recently selected the development giant as the winning bidder for the leasehold for a 600,000-square-foot spread across six floors at 341 Ninth Avenue. The landmarked, 1.4 million-square-foot facility – known as the Morgan General Mail Facility, or colloquially as “Morgan North” – occupies two full city blocks from West 28th to 30th streets, between Ninth and 10th avenues, in Chelsea.

The acquisition is slated to close later this year. The annual rent that the developer will be paying was not immediately clear.

Last year, the Washington, D.C.-based government agency hired CBRE to market the leasehold for just two floors, though that was later expanded to floors five through 10. Tishman Speyer was eventually selected among several bidders to take the leasehold.

Tishman Speyer is planning to redevelop the facility’s now-vacant upper floors as Class A office space it would either lease to one flagship tenant or multiple tenants, sources said.

A three-story USPS annex, which sits on the southern portion of the site and was built in 1992, is not part of the leasehold deal.

The general mail facility, which rises 10 and six stories, was constructed in 1933 over part of the New York Central rail yards. It is connected underground via a tunnel to the Farley Post Office, which Vornado Realty Trust and Related Companies are redeveloping into office and retail just a few blocks away. Much of the operations at the Farley building have been consolidated at the Morgan complex. According to the USPS website, the Morgan complex handles about 12,000 pieces of mail a day.

A spokesperson for Tishman Speyer declined to comment, and representatives for USPS and CBRE did not immediately respond to requests.

Further north in Hudson Yards, Tishman Speyer is developing the 65-story office skyscraper the Spiral, which pharmaceutical titan Pfizer will anchor as its new headquarters.