SL Green to Acquire Historic NYC Properties for $160M

SL Green Realty Corp. has agreed to acquire 346 Madison Ave. and an adjacent building at 11 E. 44th St. in Manhattan for $160 million. Catalyst Brands will sell the two assets encompassing 254,707 square feet of office space, Yardi Research Data shows. The transaction is slated to close during the fourth quarter.

The century-old properties are located in East Midtown, a 73-block area surrounding Grand Central Terminal. One Vanderbilt, a 1.7 million-square-foot tower, is within walking distance. The high-rise was valued at $4.7 billion last year, when SL Green sold an 11 percent ownership stake to Mori Building Co.

Following the vintage properties’ acquisition, SL Green intends to pursue a ground-up office development that could accommodate roughly 800,000 square feet. Initial plans call for column-free floors and a transit-oriented framework, among other features.

The City Council approved that rezoning in 2017, which aimed to replace some 10 million square feet of aging office space with approximately 4.5 million square feet of new commercial space. The area contained roughly 400 buildings with an average vintage of 73 years.

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SL Green is Manhattan’s largest office landlord, holding interests in 27.2 million square feet across the borough, and 2.7 million square feet in secured debt and preferred equity investments as of the end of June.

Two months ago, it sold a 50 percent stake of the $234.5 million preferred equity investment in 625 Madison Ave. for $104.9 million. Related Cos. owns the site, where it plans to build a $1 billion project. 

Manhattan’s office vacancy eases in tandem with rents

Manhattan’s average vacancy rate shaved off 130 basis points year-over-year through July, settling at 15.2 percent, well below the national average of 19.4 percent, according to a recent Yardi Matrix report. Listing rates also moderated by 4.7 percent during the same period, falling to $69.9 per square foot, which is still more than twice the U.S. average.

The borough’s office investment volume clocked in at $2.8 billion year-to-date through July, the report shows. Manhattan led the nation for pricing, with assets trading for $429 per square foot on average. For volume however, it was outperformed by Washington, D.C. (more than $2.8 billion) and the Bay Area ($3.1 billion).

Another deal set to close this quarter is Norges Bank Investment Management and Beacon Capital Partners’ acquisition of 1177 Ave. of the Americas. This agreement values the asset at $571.1 million.