The office and retail asset at 576 Fifth Ave. in Manhattan’s Diamond District has come under new ownership, courtesy of a transaction orchestrated by B6 Real Estate Advisors on behalf of Severn Realty Partners LP. The approximately 78,600-square-foot, mixed-use tower sold to SJD LLC in a transaction valued at $101 million.
The building at 576 Fifth Ave. turned more than a few heads while on the market, and not just for its location across from Rockefeller Center. B6 Real Estate Advisors’ director Zach Redding worked with colleagues Paul Massey, Dylan Kane, Daniel O’Mahony and Christian Kane to broker the deal.
“When representing our clients in the sale of their assets, we run a controlled process and were able to execute at a high level. We received offers from buyers across the board—investors, developers, users,” Redding told Commercial Property Executive.
Originally developed in 1907, the 12-story building features office space on 10 floors and a penthouse atop three floors of retail offerings, including a lower level, totaling roughly 6,200 square feet. B6 marketed the asset as a prime boutique headquarters opportunity with approximately 18,200 square feet of air rights translating to roughly 25,000 square feet of potential commercial development.
Daniel Chun and Adelaide Polsinelli of Compass and Sharon Kim Robinson of Silver and Oak Realty represented the buyer in the deal. The last major transaction on record at 576 Fifth Ave. transpired in 2015 with real estate private equity firm Savanna’s sale of the leasehold for $36 million.
Buying and selling in New York City
It’s an unusual period in the big-ticket office market of Manhattan. According to a second quarter 2021 report by Avison Young, “Investors have encountered a risk pricing crisis as office occupier conditions became strained, raising the prospect for defaults in the commodity market segment.” Manhattan office pricing from November 2019 to June 2021 dropped 20.5 percent, going from an average of $966 to $768 per square foot.
A representative of SJD noted in a prepared statement that the buyer of 576 Fifth Ave. capitalized on an opportune time in the market by emerging victorious in the bid for the mixed-use asset. B6 concurs: “We believe that the buyer made a smart and calculated assessment in purchasing 576 Fifth Ave.,” Redding told CPE. “If you look at comps from the years prior to COVID-19, there were many sales that justify a high price per square foot.”