Chrysler Building On the Market as Its Landowner Seeks to Boost Income

The iconic Chrysler Building is up for sale for the first time in nearly a decade.

According to David Heller of Savills, the goal is to maximize income to Cooper Union, which owns the land underneath, while retaining that land for the school. 

“Given the strength of the leasing market and given where this sits in the market, we feel it’s a great opportunity to reimagine what is the crown jewel of the New York City skyline,” said Heller.

Savills is officially marketing the Art Deco landmark at 405 Lexington Avenue on behalf of Cooper Union as was first reported by The Promote. The school wrestled away operations of the property from RFR Holding earlier this year for, among other things, not paying ground rent that had escalated to over $32 million a year and that was due to rise to over $41 million a year in 2028.

Income from the office tenants — including the law firm Moses & Singer, the entertainment agents of Creative Artists Agency and architect Ted Moudis — still does not cover that ground rent, and the building’s 1.2 million square feet has a vacancy of around 15 percent, according to previously reported estimates.

After a court battle, documents filed on April 29 show an entity of RFR was ordered to pay Cooper Union over $18.81 million and return all leases, security deposits and other items.

RFR principal Aby Rosen has said the building needs an infusion of more than $100 million — and that’s after he spent that much bringing many items up to date and creating amenities on the 27th floor.

“We are moving on … but we are also going to look at maybe… we’ll get another shot at it… If they’re looking for a serious developer to want to put in money,” Rosen said in a December interview when the court battle was winding down. “We made them a huge offer to put $200 million in equity again after we already [put in money] and they don’t know what they want,” he said of Cooper Union. “When they know what they want, they’ll come back to the promise — you know we’re still the best to do that type of deal, and we have our own money.”

While office rents at the nearby — and much newer — One Vanderbilt have hit $300 per square foot on its top floors, the Chrysler Building, with its lower ceiling heights and nearly hundred-year-old frame, has struggled to break $100 per foot.

Attorney Jonathan Mechanic of Fried Frank said one issue is that the center core floorplates are too “dated” for modern offices as they have awkward shapes and carveouts while the upper stories are very small. Still, he said, “It’s a spectacular canvas with Art Deco charm.”  

Others familiar with the tower and its drama agree. 

“There aren’t that many global icons in the world and this is one of them, so there will be an enormous appetite for the building,” said Woody Heller of Branton Realty Services, who was in charge of the sales process on behalf of the lender in 1993 while with JLL and then for Cooper Union in 2017 while with Savills. “But it hasn’t been actively marketed since the pandemic. Now, with the resurgence of the office market and notoriety of the building, in theory, if fixed up and rejuvenated, it could be able to lease.”

Built in 1930, the Chrysler Building’s globally recognized curved pyramidal crown and spire — which tops out at 1,046 feet — are lighted in crisp white LEDs and covered in ornamental triangular aluminum panels with eagles on the corners. The exterior is landmarked as well as the lobby and elevator cabs. 

To boost income from the tower, industry experts have long drooled over resurrecting its derelict Crown Club inside the peak along with installing a boutique hotel or luxury residential rentals.

Rosen said he had plans to create a hotel in the base from around the fifth floor — which has a huge outdoor terrace — up to the 12th floor along with opening the Cloud Club, a bar, restaurant, entertainment and event space, along with six restaurants. “We had a huge master plan for it in place,” Rosen told Commercial Observer in December. “We started the renovation, but we didn’t get to the finish line.”

When the pandemic hit and shut the city, like with most other owners, Rosen’s office tenants wanted to renegotiate their leases and pay less rent — if any at all. RFR’s partner in the Chrysler deal was also accused of fraud in Europe and declared bankruptcy. All that slowed, and finally stopped, RFR’s payments to Cooper Union.

Currently, Cushman & Wakefield is managing the property. The brokerage did not immediately respond to a request for comment.

Cooper Union itself has a sweet deal with New York City and does not pay real estate taxes. Instead, in addition to the rent, the ground lease owner turns over what would otherwise be the property taxes to Cooper Union as a tax equivalency payment (TEP). Since the building’s income dropped, so has its assessed value and those payments have also declined.

The school was tuition free until it ran into financial trouble after developing glamorous new buildings with starchitects at its East Village campus and was forced to have financial advisory firm Kroll as a fiscal monitor. The latter’s role ended on Dec. 31, 2024, and its report from February 2024 describes a 2014 bridge loan for $58.8 million that has been used to cover some of the school’s ongoing historical operating losses. 

“Cooper Union will pay interest only on this loan until 2025,” Kroll wrote. “The loan will not be fully repaid at maturity requiring a refinancing of the remaining balance of $39 million or a significant cash payment.” 

This 20-year loan was made as a private securitization of the TEP payments for 51 Astor Place — Cooper Union owns the land under that too — at an interest rate of 4.6 percent. The repayment of that loan and the board’s plan to offer full-tuition scholarships by fiscal year 2029 are among the factors that could drive the approval of any new lease terms at the Chrysler Building. 

There was also a $175 million, 30-year loan from MetLife in 2006 secured by the Chrysler Building’s land and lease payments at a rate of 5.87 percent.

The 99-year leases with Edward J. Minskoff Equities to develop the office building at 51 Astor Place and with Related Companies to develop the luxury condominium at 26 Astor Place may also provide templates for the next deal. (Yes, Cooper Union owns the land under that too.) The Kroll report described deferred revenue of $104.2 million “comprised principally of agreements to lease certain properties for 99 years to a third party.” 

Each of those developers pays a TEP, but Cooper Union now turns over half of those to the city. The deal with Minskoff included a $96.97 million loan from his entity to the school at an interest rate of 5.53 percent that ends in 2031 and is re-paid through the rent payments. Related provided $11 million upfront, which is also classified as deferred revenue by the school.   

Mechanic said Cooper Union won’t get the same high ground rent it expected from Rosen’s lease that had been previously negotiated by Tishman Speyer (which sold the lease just prior to the leap in annual rent payments). The school will, however, likely want upfront payments for its next lease. As a nonprofit, those are also not taxable.

Residential condominiums are no longer possible on land owned by others — and the school has never wanted an outright sale. But any residential or hotel renovations to the Chrysler Building would still take tons of funds, noisy work, and creative designs to snake new plumbing through occupied office floors.

Although the building is on the east side of Lexington Avenue and 42nd Street, it has direct access to Grand Central Terminal. With the introduction two years ago of a direct connection between Long Island Rail Road and Grand Central, the surrounding areas and the Plaza District have become the hottest and tightest real estate markets in the city.

But the Chrysler Building could also be dwarfed in the next decade by 175 Park Avenue — aka Project Commodore — that could rise to 1,581 feet on the site of the Grand Hyatt Hotel right across Lexington Avenue.  

Rosen also has plans for the Trylons site his firm owns outright that is adjacent to the Chrysler Building on its eastern side. RFR would either build to suit or ground lease the land to another developer for a building of 100,000 square feet or a 40-story structure with 600,000 square feet that could rise to the 52nd floor of the Chrysler Building, where the crown begins.  

“Nobody wants a not-for-profit to be the landlord or the complicated building that needs a lot of TLC,” Rosen explained in that December interview. “Five years down the drain and working hard, but that’s the name of the game.”

At one point during the court battles, Rosen’s company blamed the lack of leasing on Cooper Union’s failure to stem and condemn a rancourous confrontation between pro-Palestinian demonstrators and Jewish students on Oct. 25, 2023 that affected the real estate and investment community along with those tenants then in negotiations.

Branton’s Heller believes any new lease with Cooper Union would likely require some upfront cash that could come as a pre-payment of rent. But he says Cooper Union would want the next lessee to “thoroughly” examine the building and demonstrate they have a plan and can inject the capital for renovations as well as any tenant work letters.

“[Cooper Union] may also want to take a more active role and have more oversight to minimize the ways things could go sideways,” Heller added. In the past, there was no shortage of interest by office tenants for the building. “But no one wanted to make a commitment until they knew [Rosen] was going to be the guy and would be spending the money. There is every reason to think this building will perform strongly in the office market once it’s back in financially secure and experienced hands.”