A big-ticket office buy in Midtown this week shows investors still have an appetite for older properties, if the bones are good and location is right.
RFR Holding agreed to acquire a near-century-old tower overlooking Bryant Park from Nuveen Real Estate for just under $300 million, Green Street first reported, or an estimated $1,085 per square foot. It appears to be the city’s largest office play since CommonWealth Partners said last month it would buy Hudson Commons for more than $1 billion.
The 24-story property is attractively situated at 475 Fifth Avenue, blocks from Grand Central Terminal, and underwent a $62 million modernization in the past decade, Bloomberg reported. The upgrades, executed under Nuveen’s ownership, offer tenants a “best-in-class experience” that bolstered the property’s appeal, the seller said.
“The asset really stands out on Fifth Avenue, and we thought right now was the perfect time to move forward with a sale as capital market demand has increased,” said Ines Olesen, director of New York investments at Nuveen.
The dollar volume of investment sales took a dive in the third quarter, falling to $2.7 billion after a $3.3 billion showing in the second quarter, Commercial Observer reported. The dearth of trophy office sales accounted for that decline. Still, the publication noted that several deals in play could boost the next two quarters’ volume.
CBRE, which brokered the Nuveen-RFR deal, told Bloomberg that the property’s proximity to Grand Central was a key selling point.
“We’re bringing it up for sale now because the market around Grand Central has become so strong,” CBRE broker Darcy Stacom told Bloomberg, noting millennials who moved to the suburbs are only willing to commute so far, making offices that neighbor transit hubs a choice option.
After a difficult year and a half, Manhattan office leasing is staging a recovery. October marked the sector’s busiest month since the start of the pandemic. Some neighborhoods are faring better than others, though.
Midtown South, for example, saw demand for office leases jump 65 percent in the third quarter compared to the first. The Grand Central submarket, by comparison, rose only 13 percent in the same period.
For RFR Holding, though, securing new tenants won’t be a primary concern at 475 Fifth Avenue, which is almost fully leased, Bloomberg reported. Its tenants include Penske Media and investment adviser Kylin Management.
RFR Holding did not respond immediately to a request for comment.