Chubb, a property and casualty insurance company, has signed a 240,000-square-foot lease at 550 Madison Ave., New York City’s youngest landmark building. The tenant will be the first to move into the newly refurbished Midtown Manhattan office tower. The property has undergone extensive renovations under The Olayan Group’s ownership.
The relocation is slated for 2022, when the insurance company will occupy 10 out of the tower’s 41 floors. In September, the asking rental rate for 550 Madison Ave.’s office space was $210 per square foot, the highest listing across all major markets, according to data from CommercialEdge.
Originally designed by architect Philip Johnson and completed in 1984, the postmodern tower became an official New York City landmark in 2018. The 800,000-square-foot single-tenant building was first home to AT&T and later Sony, but the office space has stood vacant since Sony relocated two years after it sold the property to Chetrit for $1.1 billion in 2013.
The Olayan Group acquired the asset in 2016 from The Chetrit Group in a $1.4 billion transaction. The acquisition was facilitated by a $570 million loan provided by Voya Financial, Bank of East Asia, Credit Agricole Corporate and Investment Bank, Société Générale and Natixis, CommercialEdge data shows.
Revamp and re-lease
The change of hands came with extensive renovation plans. The project was estimated at $300 million in 2017, when the redesign was announced.
The refurbishment program, led by architects Snøhetta, doubled the property’s public gardens to approximately 21,300 square feet, improved ventilation systems and reduced water and energy consumption at the location, according to the property’s website. The building is in the process of obtaining LEED Platinum certification following the redesign. What’s more, in a controversial move, the building’s iconic facade was also altered, while the interior was reimagined for multi-tenant use.
Refreshing the look of landmark buildings has become an effective strategy to preserve the properties’ competitive edge in a struggling New York City office market. In April this year, the Rudin Family announced the repositioning of the iconic Thomson Reuters Building, a program estimated at $25 million.
Vacancy in Manhattan stood at 10.8 percent in the 12 months ending in September, reflecting no change from the previous month. Over the same period, the average rental rate dropped by 2.6 percent, clocking in at $83.52, a recent CommercialEdge report shows. Nevertheless, the listing rate remains by far the highest across all major markets.