Beleaguered insurance giant American International Group Inc., which announced this week that it would put its Downtown Manhattan headquarters up for sale, will likely receive significantly less in sales proceeds than if it made this move two years earlier. The 66-story, 775,000-square-foot building at 70 Pine Street is an \u201carchitectural icon,\u201d said Richard Baxter, executive vice president of Cushman & Wakefield Inc. AIG is also selling its 16-story, 279,000-square-foot building at 72 Wall Street. Icon or not, however, the 775,000-square-foot building is unlikely to command the price it would have fetched in 2006 or 2007. Whereas the building will likely sell in the $50 to $150 square foot range today, the price would have more in the \u201cnorth of $300 per square foot\u201d neighborhood at the top of the market, according to one source with an intimate knowledge of New York\u2019s office investment market. With what Baxter called \u201cbreathtaking\u201d views on the top floors, and narrow floorplates, the building could attract an entrepreneurial buyer who sees the building as an ideal candidate for conversion to a mixed-use development containing office on the lower floors, a hotel in the middle, and condominiums for the top floors. \u201c[Conversion] is probable,\u201d said Nat Rockett (pictured), managing director in the capital markets group at Jones Lang LaSalle. \u201cOnce AIG is not there, the building could be converted to another use.\u201d But with the capital markets still in a straitjacket, AIG may have to offer seller financing to entice potential buyers. All-cash buyers may also take a look, Baxter said, and foreign buyers could also enter the fray if they feel the price is right. The building also could be attractive to a large Downtown user looking to expand, though Baxter characterized that possibility as \u201cunlikely.”If AIG plans to remain in the building, a sale-leaseback is possible. The insurer occupying the building, for the next year or two, will likely be attractive to potential buyers, said Baxter. \u201cIt takes away some near-term lease-up risk for a buyer,\u201d he said. A sale-leaseback is likely to make the transaction more palatable to lenders, as well, Rockett said. \u201cAn interesting question is whose credit are you underwriting-AIG\u2019s or the U.S. governments?\u201d he said. Baxter and Rockett agree that the lightning rod that AIG has become will have no effect on the sales process. \u201cThat\u2019s going to have no effect on the investors who buy New York real estate,\u201d he said. \u201cA buyer with a long-term vision will see the potential of this asset.\u201d \u201cThe only question a potential buyer is going to ask is if AIG is going to continue to pay the rent,\u201d Rockett said.<\/p>\n","protected":false},"excerpt":{"rendered":"
Beleaguered insurance giant American International Group Inc., which announced this week that it would put its Downtown Manhattan headquarters up for sale, will likely receive significantly less in sales proceeds than if it made this move two years earlier. The 66-story, 775,000-square-foot building at 70 Pine Street is an \u201carchitectural icon,\u201d said Richard Baxter, executive…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1003953606","post","type-post","status-publish","format-standard","hentry","category-regions"],"acf":[],"yoast_head":"\n