By Nicholas Ziegler, News Editor
With the pace of its acquisitions continuing, it doesn’t appear that SL Green will be losing its status as New York City’s largest commercial-office landlord anytime soon. The firm has picked up 304 Park Ave. S., a 215,000-square-foot mixed-use office and retail building, from a partnership headed by David Berley, chairman of Walter & Samuels Inc. The property was purchased for $135 million, or $628 per square foot, and was closed by 50 percent cash and the remaining 50 percent in operating-partnership units.
“We’ve been monitoring Midtown South carefully looking for acquisition opportunities, however the consistently tightening vacancy rates and substantial lease activity in the area have driven cap rates on marketed deals below our target investment thresholds,” Andrew Mathias, president of SL Green, said. He went on to characterize the purchase as a “classic SL Green investment” in that the asset both was picked up in an off-market transaction and has potential for a future repositioning.
A first-quarter 2012 report by services firm CBRE Group Inc. noted that, while only one new office lease of more than 50,000 square feet was signed in Midtown South during the first three months of the year, overall leasing activity reached 990,000 square feet of signed lease agreements — outpacing the five-year quarterly average of 940,000 square feet. “In terms of pricing, the average asking rent jumped 8 percent during the first quarter to $48.79 per square foot, up from fourth-quarter 2011’s $45.34 per square foot,” the report noted. “Notably, over the past 12 months, the average asking rent increased 14 percent from first-quarter 2011’s $42.72 per square foot.”
In April, SL Green notched another significant achievement by signing what the firm called Manhattan’s largest office lease,inking a deal with media giant Viacom for 1.6 million square feet of office space at 1515 Broadway. And, in late February, the firm purchased the 390,000-square-foot office tower at 10 E. 53rd for $252.5 million, following the closing of that sale with a 45 percent stake in the building being sold to the Canada Pension Plan Investment Board for $57.4 million.
304 Park Ave. S. is currently 95 percent leased with a tenant roster that features lead tenant including IMG Models, as well as retail tenants H&R Block, Bath and Body Works and Time Warner Entertainment.
The transaction is expected to close June 1, 2012. Walter & Samuels represented the seller, and Eastdil Secured served as advisor.
