Chrysler Building Hits the Market, Could Go for $500M-Plus
The Chrysler Building, an icon of Midtown Manhattan, is up for sale as of today.
The owners of the landmarked skyscraper, Tishman Speyer and an Abu Dhabi government fund, have tapped CBRE’s Darcy Stacom and Bill Shanahan to market the storied office tower at 405 Lexington Avenue, across the street from Grand Central Terminal, Shanahan confirmed to Commercial Observer.
Tishman Speyer sold a 90 percent stake in the building to the Abu Dhabi Investment Council for $800 million, at the height of the market in 2008, and retained the remaining 10 percent ownership stake, sources said.
While estimates for the property vary widely, it seems unlikely to fetch the same amount today (although today the entire is up for sale versus the 90 percent in 2008).
“There are a lot of challenges on that deal,” said Adelaide Polsinelli, the vice chair of commercial investment sales at Compass, who estimates the price will be between $500 million and $800 million.
The challenges include a reset of the ground lease for the property, which is owned by the Cooper Union school, Polsinelli said. In 2018, the rent increased to $32.5 million from $7.8 million and will increase again in 2028, The Wall Street Journal first reported. On top of that, the aging building is competing with newer product, and that’s putting pressure on asking rents and pricing, Polsinelli said.
However, there are generally people who are willing to pay the price for trophy properties in Manhattan, as was demonstrated by the $2 billion purchase of the Waldorf Astoria by a Chinese insurer, and the $700 million sale of St. John’s Terminal in 2018, among others.
“The Chrysler Building is an iconic asset that will surely trade for a premium relative to its comp set,” Robert Knakal, the head of investment sales at JLL, wrote in an email, declining to provide an estimate. “It is the type of asset that will induce investors to leave their typical comfort zone.”
The 77-story Art Deco-style building was designed by William Van Allen and completed in 1930. It was briefly the tallest building in New York until the Empire State Building was completed in 1931, and that remains the world’s tallest brick building. Tenants at the Chrysler Building include Creative Arts Agency, the law firm Moses & Singer, and coworking firm Spaces, which signed an 111,000-square-foot lease in September 2018, CO reported. Asking rents at the building are currently between $50 and $60 per square foot, according to Polsinelli.