This month in real estate history

The Real Deal <i>looks back at some of New York's biggest real estate stories </i>

1960: Pan Am signs city’s largest lease at 200 Park Avenue

The international passenger airline Pan American Airways signed Manhattan’s largest office lease to date, taking 613,000 square feet in the as-yet-uncompleted tower rising at 200 Park Avenue in Midtown, 49 years ago this month.

The 25-year lease at the building that sits on top of Grand Central Terminal at 44th Street involved a total rental value of $115.5 million.

The 59-story office tower was going to be called Grand Central City, but was renamed the Pan Am Building after the deal was struck for about 15 floors.

When it opened in March 1963, the 2.9 million-square-foot office tower was the largest commercial building in the world.

The Pan Am lease had an option to purchase a 10 percent interest in the leasehold of the building, which the airline exercised. Then, in 1978, it bought the balance of the leasehold and the land under the tower for $25 million.

Pan Am sold the building to the Metropolitan Life Insurance Company for $400 million in 1981, and the airline moved out entirely in 1991.

The largest lease transaction in the city currently on record was struck in August 1984, when financial services firm Merrill Lynch & Company committed to taking 3.9 million square feet at the World Financial Center in Battery Park City.

1938: REBNY tightens appraisal standards

Following complaints of wildly inflated appraisals during the heady decade of the 1920s, the city’s leading real estate trade association, the Real Estate Board of New York, passed stricter appraisal standards 71 years ago this month.

The vote, taken in the latter years of the Great Depression, updated the realty group’s code of ethics and sought to modernize the system by which appraisers provided valuations for real estate.

The change prescribed a certain level of experience for appraisers and tightened rules governing appraisals of vacant land compared to improved properties. It also sought to preserve the data on which an appraisal was based and clarified rules for fees and commissions.

“Too many of the valuations of the boom days turned out to be ridiculously high and too many of the so-called experts were discredited,” the New York Times wrote in an article covering the vote.

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It said appraisers should not rely on exaggerated optimism and a cursory examination of property, but should pay attention to the actual or potential income of property.

At the time, real estate brokers were licensed, but there was no special license for appraisers.

The decision to tighten standards followed a meeting a week earlier in Syracuse by the six-year-old American Institute of Real Estate Appraisers that proposed comparing real estate investment returns with those of stocks, bonds or other commodities as a way to set values.

Following the savings and loan crisis of the 1980s, Congress passed a national appraisal standard in 1989 that required states, including New York, to license or certify appraisers.

1912: Assemblage complete for city’s largest hotel

The Pennsylvania Railroad purchased the final parcels needed to build the city’s largest hotel, the Hotel Pennsylvania, across Seventh Avenue from its newly constructed passenger rail station, 97 years ago this month.

The railroad used a holding company to make the purchase of the properties at 128 West 33rd Street and 137-149 West 32nd Street for an undisclosed price.

The parcels were bought two years after Pennsylvania Station, known as Penn Station, opened in 1910, occupying two city blocks between Seventh and Eighth avenues and 31st and 33rd streets.

With the purchase of the plots, the railroad controlled the western half of the city block between 32nd and 33rd streets and Sixth and Seventh avenues.

When the $10 million, 2,200-room Hotel Pennsylvania at 401 Seventh Avenue opened in January 1919, it was the largest hotel in New York City.


Compiled by Adam Pincus