Midtown’s Real-Life Monopoly Game

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

In 1934, during the height of the Depression, a gentleman from Germantown, Pa., created a game known as Monopoly. In order to win the game, a player must accumulate the largest amount of real estate. During the game, players often trade their real estate properties to their opponents. It is not strange for a player to own a property at the onset, sell or trade the property, and then finally once again regain ownership of the property. Based on recent sales of office buildings in Midtown Manhattan, it seems that many investors are actively involved in a real-life version of Monopoly.


Norman Sturner, co-founder with Neil Siderow of Murray Hill Properties, said some people are paying ridiculous prices for Manhattan office buildings. “In this market, a prudent investor should review one’s holdings and make a decision to determine which properties he wants to sell to capture profits,” he said. “We recently sold three office buildings to different purchasers, all of whom expressed an interest in converting these properties to residential. Even though we sold these buildings, we are very confident in New York City’s future and continue to be active.”


In the first week of this month, instead of selling, Sturner’s Murray Hill Properties in a joint venture with Black acre Capital Management LLC closed on the acquisition of the 900,000-square-foot, 23-story office building at 135 W. 50th St. between Sixth and Seventh avenues. The seller was the estate of Lazio Tauber. The joint venture paid about $144 million, or $160 a square foot for the building. The acquisition did not include the land underneath the building, which is owned by the estate of Peter Sharp and the Lehman family. Immediately after closing, the new owners received offers to lease in excess of 40,000 square feet.


In May, Murray Hill Properties and its partner ING Realty Partners sold the 42-story, 382,000-square-foot office building at 1450 Broadway on the southeast corner of 41st Street. The purchaser was a joint venture of the Moinian Group, Chetrit Group, and Edward Minskoff, who collectively paid $121 million, or $316 a square foot, for the building, which was built in 1931.


A few blocks away on Fifth Avenue, Chicago-based Equity Office Properties Trust, the largest publicly held office building owner and manager, closed last week on the acquisition of the 380,796-square-foot office component of the Merrill Lynch Financial Center. The building at 717 Fifth Avenue used to be the Stueben Glass building. The trust paid $160.5 million, or about $422 a square foot, for all of the office floors, which occupy portions of the second and third floors and floors five through 26 of the tower.


The balance of the building, consisting of retail on the ground floor and parts of the second and third floors, represents about 84,000 square feet and was purchased by a partnership of the Feil Organization, Lloyd Goldman, and Stanley Chera. The partnership paid $192.5 million, or about $2,292 a square foot. The seller of the building was HGA Capital, a fund of Walton Street Capital LLC, which purchased the building for $266 million in 2000.


“This transaction is a great example of buying of a creative deal structure, by executing the purchase with another investor who focuses on retail, we acquired a world-class building in prime location at a significant discount to replacement cost,” said a senior vice president of Equity Office Properties, Shobi Kahn.


“The asset fits synergistically with our current holdings, allowing us flexibility, varying price points, and operating efficiencies,” said the acting senior vice president of Equity Office Properties for New York, Don Huffner.


The combined price of $353 million for the two components of the tower is approximately $793 a square foot, one of the highest prices paid per square foot for a Midtown office tower. This price per square foot exceeds the $740-a-square-foot price paid in September 2003 by the Macklowe Organization, when it paid $1.45 billion for the General Motors Building at 767 Fifth Ave.


Directly across the street from the GM Building is the former headquarters of Revlon, located at 626 Madison Ave. between 58th and 59th streets.


Last month, SL Green Realty Trust entered into a contract to pay $250 million, or $454 a square foot, for the 16-story, 550,000-square-foot office tower. The seller is the Ginsberg family.


Across the street from this building is 660 Madison Ave. Earlier this year, Brener International purchased the 253,000-square-foot office condominium portion of the tower for about $640 a square foot.


On the corner of 42nd Street and Broadway is the former land marked Knickerbocker Hotel, built in 1907. Last week Sitt Asset Management paid about $160 million, or $507 a square foot, for the 315,000-square-foot tower, also known as 6 Times Square. The seller was SL Green Realty Trust. The purchasers have indicated that they have an interest in converting the top floors into a hotel.


The flagship store of retailer Paul Stuart occupies 77,000 square feet at the office tower located at 350 Madison Ave., between 44th and 45th streets. Last week, Kensico Properties entered into a contract to purchase the 385,000-square-foot tower for about $203 million. The sellers are Max Capital Management and the Landis Group. The purchaser has lined up RBS Greenwich Capital Financial to provide a $184 million floating-rate mortgage.


Around the block, Kensico Properties owns the 19-story, 135,000-squarefoot office building at 11 East 44th St. The ground-floor retail is leased to J. Press Men’s Clothing. It has agreed to sell the building to DCD Capital for $45.5 million, or $337 a square foot.


One of New York’s most prominent real estate investment trusts, SL Green Realty Trust, in partnership with the New York City Investment Fund and the Witkoff Group, closed on the purchase of the 870,000-squarefoot office tower at 485 Lexington Ave. for $225 million, or $258 a square foot, in August. The seller was TIAA-CREF, which sold the building and the adjacent one at 750 Third Ave. for $255 million to the SL Green Realty Trust.


This summer the City University of New York announced plans to open a college of journalism. In June, CUNY purchased the former Herald Tribune Building at 230 W. 41st St. between Seventh and Eighth avenues. CUNY paid about $75 million, or $250 a square foot, for the 20-story, 300,000-square-foot building to a partnership that includes Prudential Real Estate Investors and Kevin Wang, principal of KW Partners. That partnership purchased the building four years ago for $31.5 million.


The executive managing director of the Capital Transactions Group at Studley, Woody Heller, said, “In general, are these the right prices or the wrong prices? Do they make sense in this market? Will they change? It is too soon to say, in the content of current market conditions. These acquisitions, while ambitious, seem rational.”


During the past few months, Midtown office buildings have continued to sell at record prices. Prices in Midtown ranged from $150 to $790 a square foot. The third anniversary of the attacks of September 11, the upcoming election, and the threats of terrorism have not reduced the interest of real estate investors to acquire office buildings in Manhattan.


Low interest rates and the availability of long-term fixed-rate financing continue to aid in the sales of commercial real estate. The stock market may fluctuate, yet the prices of office buildings continue to rise at record pace.


The New York Sun

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