The Real Deal New York

AvalonBay nixes Columbus Circle rentals, pursues condos instead

REIT is pricing units from $1M to $6M
By E.B. Solomont | November 13, 2018 05:00PM

AvalonBay CEO Tim Naughton and renderings of the The Park Loggia (Credit: Avalon Communities and SOM)

Despite softness in New York City’s condo market, AvalonBay Communities has nixed plans for a rental-and-condo tower in Columbus Circle. Now, it’s going all-condo.

The company, which launched a teaser site for the Park Loggia on Tuesday, has priced the 172 units between $1 million and $6 million.

“There is a sense that there’s pent-up demand for product at this location,” said Beth Fisher, senior managing director at Corcoran Sunshine Marketing Group, which is handling sales.

The Virginia-based real estate investment trust said it was considering the switch during an earnings call last month. AvalonBay executives said they had always considered condos for the building, located at 15 West 61st Street, which is now getting “modest” upgrades. During the earnings call, CEO Tim Naughton said the condo plan could have a pre-tax value of $150 million — 50 percent higher than its rental value.

“Renting is our base business,” he said at the time. “The fact that this building is going to be ready for occupancy sometime next year, it is a unique advantage that we have.”

Prices will start at $1 million for studios and going up to $6 million for four-bedroom units. According to Fisher, 83 percent of the building is priced under $5 million.

“There’s a significant portion that’s under $3 million and plenty under $2 million,” she said. The average unit size is 1,100 square feet.

AvalonBay paid $300 million in 2015 for the property, the former home of the American Bible Society. The REIT recently announced that Target signed a 35,000-square-foot lease in the retail portion of the building.

Skidmore, Owings Merrill designed the 32-story structure, which features a porte-cochère, fluted terracotta stonework and loggia in many residences. The seventh floor will house amenities including private dining rooms, a game room, playroom and gym.

To reduce its exposure to the New York market, AvalonBay is looking to sell an 80-percent stake in a portfolio of five Manhattan buildings to Invesco for $760 million.