Milstein Rebrands 335 Madison Avenue to 22 Vanderbilt

In hopes of attracting tenants, the landlord has ditched Madison Avenue to align itself with SL Green’s One Vanderbilt.

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Once a grand hotel, 335 Madison Avenue underwent a back-breaking transformation in the early 1980s to become the headquarters of Bank of America

Milstein Properties, a family firm which had just acquired the building at that time, went over the top to attract what was then a San Francisco-based financial institution, even using stone from the same quarry as Bank of America’s West Coast office on the facade.

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But, a 30-year lease and a five-year extension later, Bank of America left, a global pandemic hit, and the building now sits half-empty.

Times have changed once again. The Milstein family has tossed the brand name of Madison Avenue in the dumpster and changed the property’s address to 22 Vanderbilt, hoping to cash in on the cachet of SL Green (SLG) Realty’s nearby hit, One Vanderbilt.

“People who are really looking for a deal have lots of buildings with vacant space to choose from,” Milstein Properties partner Michael Milstein told Commercial Observer. “[But] if you are a company that wants to recruit the very best talent and bring them together in an environment where they’re going to be most productive … That actually is one of the reasons for the readdressing of 22 Vanderbilt.”

It’s not just a new name for the 1.1 million-square-foot office building. Milstein dropped $250 million on renovations to get some new deals signed. It revamped the lobby, added an outdoor terrace on the seventh floor spanning a block and facing Grand Central Terminal, and opened the Founders Perch, an event space overlooking the lobby. (Milstein Properties declined to provide asking rents).

“22 Vanderbilt is functionally a brand-new office building from the inside out,” Milstein said. “We’ve replaced and modernized all the systems and the experience of being in the building day to day.”

22 Vanderbilt.
22 Vanderbilt. Photo: Yvonne Albinowski/for Commercial Observer

But Milstein still has to contend with a historically sluggish office leasing market, plenty of other available space in Midtown East, and droves of workers who aren’t traveling in to work every day.

Kastle Systems data — which many in real estate have questioned the accuracy of — found that office attendance for the week of Dec. 5 was 47.8 percent in New York City, a nearly 2 percent drop compared to the week prior and lower than the average occupancy in the country. 

In the third quarter of 2022, the availability rate for Midtown dropped 1.1 percentage points to 15.3 percent, the lowest since December 2020, according to Colliers. Average asking rents also decreased by 1.2 percent to $78.61 per square foot.

The availability rate in the area surrounding Grand Central, in particular, increased to about 17.9 percent in the third quarter, according to Avison Young.

Milstein believes giving the building a name change could help it attract some of the leasing momentum its neighbor, One Vanderbilt, has achieved.

With a top asking rent of about $300 per square foot, the $3 billion, 77-story One Vanderbilt was about 70 percent leased when it opened in September 2020, when the leasing market was essentially caving in on itself thanks to remote work and government restrictions on in-person office attendance.

People questioned the timing of opening an office building then, but SL Green had them eating their hats. By September 2022, the building was 99 percent leased. And One Vanderbilt isn’t the only shiny new property to sign deals in the area.

Just a dozen or so blocks to the north, L&L Holding Company’s ​​425 Park Avenue also opened at 85 percent leased in October — after breaking a two-year leasing drought in 2021 — with leaders in its development leaning heavily on the legacy and “heroic” nature of Park Avenue itself.

Speaking to the attraction of newer buildings over their older counterparts is the prediction by the New York Building Congress that construction spending could reach a total of $270 billion in New York City over the next three years.

Has it worked?

Milstein recently signed deals with Armani, which recently took the penthouse office suite; Addepar, a wealth management platform; and Morning Consult, a technology company. The average floorplate in the building spans just under 40,000 square feet with many of the spaces prebuilt by the landlord. And there still is about a half a million square feet available in the building.

And Milstein has high hopes for the building’s future.

“We think that both East Side Access coming at the same time as the completion of One Vanderbilt, our repositioning and embracing that corridor is monumental for the neighborhood,” he said.

Many developments in the vicinity have hinged on the scheduled opening of $11 billion East Side Access by the end of 2022 with the potential to bring office workers from Long Island and Queens directly into Grand Central for the first time. 

Mark Hallum can be reached at mhallum@commercialobserver.com.