The Chrysler Hotel? Aby Rosen to consider conversion for $151M trophy asset

Keeping the building as offices would be risky with modern competition

TRD New York /
Mar.March 12, 2019 05:30 PM

Aby Rosen of RFR Holding and the Chrysler Building (Credit: iStock and Getty Images)

What to do with an aging office building, in desperate need of repairs, that’s bleeding money and sitting on a ballooning ground lease?

As The Real Deal first reported on Friday, Aby Rosen’s RFR Holding and Austrian real estate firm Signa Holding GmbH agreed last week to purchase the landmark skyscraper at a steep discount. But they’ll now have to grapple with the same issues that plagued the seller, Abu Dhabi’s Mubadala Investment Company.

Mubadala paid $800 million to acquire a 90 percent stake from Tishman Speyer in 2008 but never did quite rectify the issues associated with a nearly 100-year-old office building. But a hotel conversion could be the solution.

Rosen said in an email on Tuesday that he would consider converting the tower into a hotel, Bloomberg reported.

Scott Rechler’s RXR Realty, whose bid reportedly lost to Rosen’s $151 million offer by just $1 million, had also considered bringing a hotel to the 68-story tower as part of a mixed-used conversion, per Bloomberg.

Whatever happens to the 1930 Art Deco building, necessary upgrades could cost hundreds of millions of dollars. With the amount of modern, amenities-packed office space coming on line at Hudson Yards and beyond over the next few years, keeping the building as offices would also be a risky move. (Even then, it would still have to compete with old rival the Empire State Building.)

The average rent at the Chrysler Building is around $50 per square foot, half the average asking rent for new office space at Hudson Yards.

“It’s a magnificent building with uninterrupted views from the high floors but changing use is not without issues,” Newmark Knight Frank’s Lawrence Wolfe told Bloomberg. The large floor plates that office tenants prefer can be tricky to convert to other uses, and it could be difficult to create a dedicated entrance for hotel guests in the landmarked lobby.

A block away, RXR is joining TF Cornerstone and MSD Capital on their $3 billion redevelopment of the Grand Hyatt hotel at Grand Central, which will involve transit upgrades at the terminal and subway station. Rechler stepped down from his position on the MTA board last month to avoid a conflict of interest. [Bloomberg] — Kevin Sun


Related Articles

arrow_forward_ios
Aby Rosen of RFR Realty and the Chrysler Building (Getty; iStock)

Aby Rosen is bringing back the Chrysler Building’s observation deck

Aby Rosen is bringing back the Chrysler Building’s observation deck
Andrew Florance, CEO of CoStar (Photo by Jeffrey MacMillan for the Washington Post)

EXCLUSIVE: CoStar’s Andy Florance on buying Ten-X, the future of office buildings and why brokers don’t need discounts

EXCLUSIVE: CoStar’s Andy Florance on buying Ten-X, the future of office buildings and why brokers don’t need discounts
An institutional investor’s sale of a 7 percent stake in an exchange-traded real estate fund reveals deep concerns about the sector. (Credit: iStock)

Mystery investor dumps big stake in real estate fund

Mystery investor dumps big stake in real estate fund
Thor Equities’ big bet on Fulton Market is paying off

Thor Equities’ big bet on Fulton Market is paying off

Thor Equities’ big bet on Fulton Market is paying off
CEO Andrew Florance (Credit: CoStar via YouTube)

CoStar buying Ten-X for $190M

CoStar buying Ten-X for $190M
Small landlords, such as Jan Lee, a New York landlord who owns two buildings, say Wall Street players will take their place unless rent relief comes soon. (Credit: Twitter; background via BRYAN R. SMITH/AFP via Getty Images)

Small landlords call for rent relief package, fearing Wall Street takeover

Small landlords call for rent relief package, fearing Wall Street takeover
Cohen Brothers Realty president and CEO Charles Cohen and Cushman & Wakefield Chairman of Global Brokerage Bruce Mosler

Hear from billionaire Charles Cohen on today’s TRD Talk

Hear from billionaire Charles Cohen on today’s TRD Talk
Northwind's Ran Eliasaf

Northwind Group launches $220M debt fund focused on NYC

Northwind Group launches $220M debt fund focused on NYC
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...