300%

There aren't many places where you can triple your money in three years, but Midtown Manhattan real estate turns out to have been one of them, at least recently. Tishman Speyer, which bought the New York Times's elegant old Times Square building in 2004 for $175 million, is selling it to Africa Israel USA for about $525 million, the Wall Street Journal reported yesterday. The Journal reports, "It would be the second time in recent months that Tishman Speyer has tripled its investment on a prominent Manhattan office building. In January, it received $1.8 billion for 666 Fifth Avenue, an office tower it bought in 2000 for about $520 million."

Our own Michael Stoler, as is often the case, was ahead of this story, reporting on our page one on April 19 that "In November 2004, a partnership of Tishman Speyer Properties and the New York City Employees and the New York City Teachers pension plans paid $175 million, or $227 a square foot, for the New York Times Building at 229 W. 43rd St. The 770,000-square-foot property is made up of four connected buildings whose occupant, the New York Times, has been the sole occupant since the property was constructed in 1913. Last week, the joint ventures retained CB Richard Ellis to sell the building, which will be vacated when the Times relocates to its new headquarters across from the Port Authority Bus Terminal. Industry leaders expect the property, which has excellent retail and office components, may fetch in excess of $550 million, or $725 a square foot."

Mr. Stoler's dispatch ran under the headline, "Rapid Appreciation in Herald, Times Squares." Without Governor Pataki's leadership in removing the Cuomo Tax, a 10% surtax on gains on commercial real estate transactions of more than $1 million, such rapid sales and appreciation would be far less likely. But the news here is about more than just one tax cut, however important it was. It is about the remarkable resurgence of New York City after September 11, 2001, under the leadership of Mayors Giuliani and Bloomberg. And it is about the globalization of the world economy in a way that makes it possible for foreign investors such as Africa Israel's Lev Leviev, an Israeli who was born in what is now Uzbekistan, to buy New York City buildings without facing excessive bureaucratic obstacles or hurdles.

Had the New York Times Company only held onto its building for another three years, it would have made another $350 million on the sale, a fact that certainly can't be lost on the critics of the company's management. But that couldn't have been known for certain three years ago. Such a bet requires not only analysis but also a certain optimism about New York City per se. The persons paying big prices for Manhattan buildings are expressing confidence in the future of the city as a commercial center, even in an age of terrorism and telecommuting. We don't mind saying we find it an encouraging development.