The Real Deal New York

Sabey looks to sell office portion of 375 Pearl for north of $300M

Seattle-based firm will retain datacenter floors below
By Rich Bockmann | November 06, 2018 02:45PM

375 Pearl Street and CEO John Sabey (Credit: Wikipedia and Sabey Corporation)

Now that redevelopment is finished at the former Verizon Building in Lower Manhattan – once considered among the ugliest buildings in the city – owner Sabey Corporation is looking to sell the tower’s office portion.

The Seattle-based datacenter landlord put floors 15 through 30 at 375 Pearl Street – spanning some 600,000 square feet – on the market with an asking price north of $300 million, sources told The Real Deal.

Sabey specializes in providing turnkey and wholesale datacenter space, so the city’s traditional office market is not its core strength. That said, the project is now fully leased, and by offering the office floors up for sale Sabey is looking to shed a non-core asset while retaining the datacenter floors below, a source with knowledge of the company’s plans said.

A representative for Sabey could not be immediately reached for comment. An Eastdil Secured team of Jeff Scott, Doug Middleton and Brett Siegel is marketing the property. The brokers did not respond to requests for comment.

Sabey paid $120 million to buy a commercial condominium covering 29 floors at the tower out of foreclosure in 2011 from M&T Bank, which took control of the mostly empty building the year earlier from Taconic Investment Partners.

Taconic had shelled out $173 million for the property in 2007 with plans to convert the 1970s-era telephone switching building into office space, but then the financial crisis put a halt to the plans.

At first, Sabey had no intentions of carrying through with the conversion, but by 2014 the company switched track and came up with a design to renovate the upper portion into office space.

Rafael Vinoly Architects came up with the design, which included knocking out portions of concrete and brick walls that at some points stretched four feet thick and replacing them with floor-to-ceiling windows. (Vinoly’s company this summer signed a 36,550-square-foot lease to relocate its offices to the tower from its longtime home in Hudson Square.)

And the project has been a major hit with the City of New York, which has leased the vast majority of the office space on behalf of a handful of agencies for the next 20 years.

Most recently, the New York Police Department in October signed a lease for three floors, covering 106,000 square feet.

The Department of Finance, the Human Resources Administration and the Department of Sanitation have inked deals totaling more than 450,000 square feet.

Sabey last year refinanced the commercial condo with a $200 million loan from Wells Fargo.