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AEW Capital seeks $350M for Grand Central dev site
250 Park Ave could be turned into 1M sf office tower
While debate rages over the future of the office, one investor is looking for someone bullish enough to build a 1 million square foot tower near Grand Central Terminal.
AEW Capital Management, the real estate arm of French investment manager Natixis, has put the aging office building at 250 Park Avenue up for sale, eyeing a price of $300 million to $350 million.
The 1920s-era building is 76 percent occupied, but AEW has structured the leases so a buyer can terminate them and demolish the edifice. With special permitting bonuses available under the Midtown East rezoning, a new building could be as large as 950,000 square feet.
“The property is ideally positioned for the next cycle given ownership’s forward-thinking lease structure,” according to marketing materials from Newmark, where a team led by Adam Spies and Doug Harmon is handling the sale process.
A spokesperson for Boston-based AEW said the property is in an ideal location a that they’ve already received “significant interest from qualified purchasers.”
The company, headed by CEO Jonathan Martin, has owned the property since the 1980s. It sits between East 46th and 47th Streets, just a short walk north of Grand Central — an area that has become a hotbed of office development.
One block north is JPMorgan’s 2.5 million-square-foot headquarters at 270 Park Avenue, which is scheduled for completion next year. Next to Grand Central, SL Green completed 1.75-million-square-foot One Vanderbilt in 2020, and Scott Rechler’s RXR Realty is working with TF Cornerstone to develop a 2.1 million-square-foot office and hotel at 175 Park Avenue.
While hybrid work has eroded the viability of many office buildings, demand has endured for prime space and some investors are betting it will continue. The so-called flight to quality, especially addresses within walking distance of commuter rail stations, is what would make redevelopment of properties like 250 Park attractive.
The trend, however, may be losing steam.
The average effective rent for Class A office space in Manhattan has been coming down since peaking at $105 per square foot in the first quarter of 2023, according to CompStak. Rents for that prime space — which includes new, trophy and recently renovated buildings — ended the year at about $88 per square foot.