GDS Development, Klövern buy Midtown East co-op for $184M

Rezoning allows for larger office building

Klövern AB of Sweden and GDS Development Management have paid $184 million for all 29 units at a Midtown East co-op building, paving the way for the partnership to take advantage of the neighborhood’s rezoning.

The companies purchased all the apartments in 417 Park Avenue, a 14-story co-op constructed in 1916. The property is located within the 70-plus blocks the city rezoned in 2017, allowing for the address to have an office building with a floor-area ratio of 25, or nearly 220,000 square feet.

Crain’s reported last year that GDSNY (the rebranded abbreviation for GDS Development) was negotiating for the property. Representatives for the new owners declined to provide details on what they plan for it.

CBRE’s Bill Shanahan, Darcy Stacom and David Fowler advised the co-op owners on the deal. The owners had tapped the brokerage in 2018 after receiving various offers from investors.

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Plans for at least three massive office towers in the rezoned area have been revealed. JPMorgan’s headquarters at 270 Park Avenue is expected to span 2.5 million square feet, while Harry Macklowe’s proposed office tower along East 51st and East 52nd streets could exceed 1 million. TF Cornerstone and MSD Partners plan a 2 million-square-foot mixed-use building in a $3 billion redevelopment of the Grand Hyatt at 109 East 42nd Street.

Also, Vornado Realty Trust and Rudin Management have designs for a tapered 1,450-foot tower at 350 Park Avenue. The plan — one of several being considered for the lot — would yield 1.68 million square feet of leasable office space.

At the time of the rezoning, city officials projected that the changes would spur the creation of 6.5 million square feet of office space.

GDSNY and Klövern have teamed up before. In 2018, GDSNY and Klövern acquired 322-326 Seventh Avenue for $36 million. The two also bought a 97-year ground lease at 118 Tenth Avenue in the Meatpacking District for $23 million last year. Leasing launched at the partnership’s office building at 1245 Broadway late last year.