Bloomberg News

Verizon to Sell Part of Lower Manhattan Tower to Condo Developer

September 13, 2013

Verizon Communications Inc. (VZ:US), the second-largest U.S. phone company, agreed to sell part of its New York headquarters building for $274 million to a developer who plans to convert the space to luxury housing.

Magnum Real Estate Group is buying a condominium stake in the tower at 140 West St. in lower Manhattan, including the top 22 floors and a sub-basement level, Verizon said yesterday in a statement. The carrier is keeping 60 percent of the building, across from the almost-completed 1 World Trade Center. The rest will be converted into a “world-class residential property,” Magnum President Benjamin Shaoul said in the statement.

The 32-story tower, a city landmark, will be transformed “from a traditional telecommunications hub to a multipurpose building that will contribute meaningfully to the city’s long-term vision for a vibrant World Trade Center neighborhood,” said John Vazquez, Verizon’s senior vice president of global real estate.

It’s become increasingly attractive to convert New York office space into housing, something that’s already happened to other Verizon buildings. Manhattan apartment prices climbed to a median of $865,000 in the second quarter, up 4.3 percent from a year earlier, as buyers competed for a dwindling supply of properties for sale, according to data from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

Walker Tower

A Verizon building on West 18th Street in Chelsea was sold in 2009 to a partnership led by JDS Development Group, which converted it into luxury condos. The 24-story Walker Tower project, where a top-floor penthouse was listed for sale at $55 million, is expected to be completed this year.

Magnum plans to convert the West Street space into as many as 175 condominium units, a majority of which would have three bedrooms or more, Shaoul said in a telephone interview. The property would include a gym as well as playrooms for children and teens. Apartments will start on the 11th floor and rise to the 32nd.

Shaoul said he aims to price the apartments at less than the market rate for condos in the Tribeca neighborhood, with three-bedroom units starting at about $3.2 million and five-bedrooms in the $6 million to $7 million range. He anticipates being able to start sales in April and have residents move in as early as June 2015.

“The building does not have one bad view from one window,” he said. “Every apartment has great views. We have water views from three sides.”

Limestone Carvings

The tower, built in the 1920s and once known as the New York Telephone Co. Building, has a vaulted pedestrian arcade along Vesey Street, the side that faces 1 World Trade Center. It survived the collapse in 2001 of the twin towers to its south and 7 World Trade Center to the east. Many of the building’s ornate limestone carvings were destroyed and later restored by artisans, according to the website NYC-Architecture.com.

Last year, the lobby was submerged as the result of flooding from Hurricane Sandy.

Verizon is keeping the second through 10th floors and four of the five sub-basement levels. The company is moving its headquarters uptown to 1095 Avenue of the Americas and transferring about 1,100 employees to a building on Flatbush Avenue in Brooklyn.

The company is bolstering its finances after agreeing to buy Vodafone Group Plc (VOD)’s 45 percent stake in the Verizon Wireless joint venture for $130 billion. Two days ago, the company sold a record $49 billion in bonds in an eight-part offering to help fund the transaction.

Cushman & Wakefield Inc. Executive Vice Chairman Josh Kuriloff led the marketing of the West Street property.

To contact the reporters on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net; 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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