SL Green snaps up West Side office property
Redeveloped property will target TAMI and boutique FIRE tenants
Following a strong quarter of office leasing highlighted by a big Amazon deal near Hudson Yards, SL Green Realty has picked up another West Side office property with plans to attract yet more tech tenants.
The real estate investment trust has closed on its $90 million acquisition of 707 Eleventh Avenue, according to property records filed with the city on Tuesday. The six-story building had been owned by fashion house Kenneth Cole since 2004, and was home to its worldwide headquarters.
SL Green plans to redevelop the property “into a modern, Class-A building, attracting companies across industries, including TAMI and boutique FIRE tenants,” the company stated in a press release announcing its fourth quarter earnings Thursday.
“If you roll the tape back a couple years ago, tech tenants by and large migrated to older buildings” in Midtown South, SL Green director of leasing and real property Steven Durels said during the Q&A segment of Thursday earnings call. “Now they’re finding themselves needing to be in certain types of buildings” with larger floor-plates and more modern infrastructure.
The company signed more than 1.2 million square feet in Manhattan office leases in the fourth quarter alone, accounting for more than half of the year’s total volume of nearly 2.5 million square feet.
In addition to the 16-year Amazon lease at 410 Tenth Avenue, SL Green also inked a 10-year, 226,556-square-foot renewal with BMW at at 555 West 57th Street, and a 15-year, 45,954-square-foot lease with Oak Hill Advisors at the under-construction One Vanderbilt Avenue.
Overall, the company reported earnings of $0.22 per share for the fourth quarter, a turnaround from the net loss of $0.73 per share for the same period a year before. Earnings per share for the full year were $3.11, up 16 percent from 2018.
The acquisition of 707 Eleventh Avenue stands out amid SL Green’s recent selling spree, as the firm has liquidated much of its suburban portfolio with the sale of properties in White Plains and Stamford in the last quarter. The company also sold off a pair of development sites in the city, at 562 Fifth Avenue in Manhattan and 1640 Flatbush Avenue in Brooklyn.
These sales have freed up funds for SL Green’s ongoing stock buyback program, as the firm continues to believe that its stock is undervalued. SL Green embarked on purchasing $1.5 billion of its common stock in 2017, and has since increased the size of the program to $3 billion.
“We’re as much a buyer today as we were one or two years ago,” SL Green CEO Marc Holliday said about stock buybacks on the call, noting that the value of the company has also increased as its various development projects come closer to realization.