Boston Properties has signed a new tenant to 360 Park Ave. South, a handsome but mostly vacant building whose co-owner sold its stake back to the developer earlier this year for $1.
Ziff Davis agreed to relocate to corporate headquarters from 114 Fifth Ave. to the 20-story building at East 26th Street. The publishing house leased 23,000 square feet on the 17th floor, where the asking rent was $110 per square foot, according to broker CBRE.
The signing of Ziff Davis means the building is 25% leased, CBRE said. Investment firm Iconiq Capital agreed earlier this year to lease 70,000 square feet on the 18th and 19th floors at a starting rent of $103 per square foot, according to CoStar. Tenants are expected to move in this summer now that Boston Properties has wrapped up $100 million worth of renovations, with new lobbies, a roof deck, and a planned 7,000 square-foot restaurant from James Kent, a Michelin-starred chef who died suddenly this week at age 45.
Boston Properties expects 360 Park Ave. South’s fortunes will stabilize by late next year. But one investor, the Canada Pension Plan Investment Board, decided it couldn’t wait and early this year sold back its 29% stake for a dollar after putting $71 million into the building. By exiting, the pension fund avoided another $46 million in future funding obligations and saved $5 million in annual interest payments.
Those payments could rise because the building’s $220 million mortgage, carrying a 7.8% interest rate, comes due in December and may have to be refinanced at a higher rate.
CPPIB manages more than $400 billion in assets and has parted Manhattan office holdings recently at fire-sale prices. This year it sold its 45% stake in 10 E. 53rd St. to majority owner SL Green for $7 million and about $99 million in assumed debt. The pension fund invested $57 million in 2012 and a decade ago owned 1221 Sixth Ave., 600 Lexington Ave., and three others. The fund declined to comment.
Boston Properties acquired 360 Park Ave. South in 2021 for $300 million from Enterprise Asset Management, a real estate firm controlled by the late Meyer “Mike” Steinberg. The building’s anchor tenant, publisher Reed Elsevier, had moved out and Boston Properties, owner of the GM Building and other prime office towers, began renovation work on the 440,000 square-foot building.
Several handsome but older buildings on Park Avenue’s southern half are struggling to lure tenants when newer space is available.
Boston Properties officials say now that renovation work is done, interest in 360 Park Ave. South is picking up.
“Clients can actually see the very high quality of the finishes and the lobbies and the common areas and the amenities that we’ve put in place,” Hilary Spann, executive vice president for the New York region, said on a conference call last month. “We feel encouraged by the fact that the volume of interest in the building has stepped up meaningfully since we completed it and opened it.”
Aaron Elstein , 2024-06-18 18:59:09
Source link