It’s a landmark deal for a landmark building.
On Wednesday, building developer Tishman Speyer agreed to a $235 million deal to take control of the legendary Chrysler Building in Midtown Manhattan. The agreement comes amid an office real estate renaissance in the Big Apple, though returning the Art Deco skyscraper to its Class A former glory will take a little elbow grease and a whole lot of dough.
Déclass A
For Tishman Speyer, there’s no place like the Chrysler. The firm and partner investors purchased the building and a basket of other buildings back in 1997 for some $220 million, though in 2008 sold a 90% stake for $800 million during the Great Recession. The nearly century-old tower, including the firm’s remaining 10% stake, flipped hands again in 2019 for just $150 million, a sign of its decaying conditions and appeal. But a judge later terminated the lease after its most recent owner got crushed under the weight of the commercial real estate industry’s COVID-era meltdown.
As Tishman gets the keys back, its office space is around just 50% full, sources told the New York Post. The firm’s renovation plans include fitting at least 75% of the vacant space with ready-to-occupy suites, face restoration, upgrades to elevators and other mechanical systems, and an upscale lounge and dining area on the 61st floor, where the iconic eagle gargoyles perch.
On the other side of the extreme building makeover is a white-hot office market:
- Office rentals in Midtown now go for an average asking price of $85.08 per square foot, according to Colliers’ recent third-quarter report, good for the highest point since August 2020, and roughly on par with the rate seen just before the pandemic. Class A buildings asked for an average of $91.08 per square foot, the highest price since 2008.
- Meanwhile, Colliers says that Manhattan’s year-to-date leasing volume through the first three quarters stood at 32.8 million square feet, up more than 9% year over year and the strongest first nine months of a year since 2000.
Techies Take Manhattan: Behind the rebound? Tech companies, which have ridden the AI boom to expand physical footprints across New York, signing up for more than 4 million square feet of office space in the first half of the year, per Colliers. That represents more than 18% of all office leasings in the bureau, the highest share the industry has ever taken.