Bloomberg News

Clarion Said to Buy NYC Tower in Midtown South for $225 Million

May 28, 2013

Clarion Partners LLC agreed to buy a 108-year-old office tower near Manhattan’s Union Square for $225 million, more than twice what it sold for three years ago, as demand in the area surges, a person familiar with the deal said.

Clarion, a New York-based manager of real estate investment funds, has a contract to purchase 100-104 Fifth Ave. from Kaufman Organization and Invesco Ltd. (IVZ:US), said the person, who asked not to be identified because the negotiations are private. The sellers paid $93.5 million for the 17-story, 270,000-square-foot (25,000-square-meter) property in 2010.

The price reflects the premium buyers will pay for offices in midtown south, the areas roughly between 30th and Canal streets where growing technology, media and fashion companies have driven the vacancy rate to the lowest in the U.S. The deal values the building at more than $800 a square foot, a price at which only “a handful” of properties have sold since the real estate crash, said Ben Thypin, director of market analysis for New York-based research firm Real Capital Analytics Inc.

“Employers want to be in midtown south because their employees want to be there,” Thypin said. “As a result, employers are willing to pay significantly higher rents in midtown south than they have historically and, in turn, the anticipation of further rent growth makes midtown south an attractive place to buy property.”

Rising Values

Last year, 610 Broadway, a glass-fronted building at the corner of Broadway and Houston Street completed in 2005, was sold to LaSalle Investment Management for $108 million, or $886 a square foot, according to Real Capital data. German investment firm Jamestown Properties paid more than $1,000 a square foot for the Milk Studios office building at 450 W. 15th St. in the Meatpacking District, a former factory area that has become a magnet for nightlife and high-end retail.

Invesco and Kaufman bought 100-104 Fifth as prices were beginning to recover from the 2008 financial crisis, planning about $9 million of improvements, according to the building’s website. They brought in such tenants as Yelp Inc. (YELP:US), the operator of a local search and user-review website, and Apple Inc.’s iAd mobile-advertising platform. The building is close to fully occupied, the person with knowledge of the deal said.

The tower was 60 percent occupied when Invesco and Kaufman bought it, according to a Jan. 2 story in the New York Times.

A call to Suzanne Franks, a spokeswoman for Clarion, wasn’t returned. Michael Giglio, a principal for Kaufman, a New York-based real estate company, also didn’t return a call. Bill Hensel, a spokesman for Atlanta-based Invesco, declined to comment.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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Companies Mentioned

  • IVZ
    (Invesco Ltd)
    • $40.36 USD
    • -0.10
    • -0.25%
  • YELP
    (Yelp Inc)
    • $57.09 USD
    • -1.31
    • -2.29%
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