Time Warner Inc. (TWX:US) sold its headquarters space at Time Warner Center in New York City’s Columbus Circle for $1.3 billion to a group led by Related Cos., with plans to move to the developer’s Hudson Yards project.
Related, which built Time Warner Center in the early 2000s, is teaming with the Abu Dhabi Investment Authority and the Singapore sovereign-wealth fund GIC Pte to acquire the 1.1 million-square-foot (102,200-square-meter) space, Time Warner said today in a statement. Time Warner Center, a 2.8 million-square-foot two-tower complex at the southwest corner of Central Park, also has a Mandarin Oriental hotel, Jazz at Lincoln Center and some of the city’s most expensive condominiums.
Time Warner plans to consolidate its Manhattan offices into a new skyscraper at Hudson Yards, the biggest private development in U.S. history, according to the real estate firm. The project will be built largely over a 26-acre (11-hectare) train yard, extending the Midtown business district west almost to the Hudson River.
“It’s all getting toward critical mass,” Barry Gosin, chief executive officer of brokerage Newmark Grubb Knight Frank, said in a telephone interview before today’s announcement. “This makes it a real project, and that’s great for the city.”
Time Warner intends buy its space at Hudson Yards. The company said it expects to own more than 1 million square feet at a 2.6 million-square-foot building to be built at 10th Avenue and West 33rd Street, where it will house about 5,000 employees, according to the statement.
Joanna Rose, a Related spokeswoman, declined to comment on what Time Warner will pay for its Hudson Yards offices. In September 2012, Related Chairman Stephen Ross told Bloomberg Television that the developer planned to bring early tenants of the complex in “at cost,” meaning they would be asked to cover only construction-related expenses, as a means to expedite development. Ross said Related would make its profits on the rest of the project, which includes high-rise apartment towers closer to the river.
The new skyscraper, 30 Hudson Yards, was designed by the architectural firm Kohn Pedersen Fox Associates and is slated to be the fourth-tallest building in New York, at 1,227 feet (374 meters), Time Warner said.
The company will lease back its offices at Columbus Circle until early 2019. It will occupy 30 Hudson Yards at the end of 2018, according to the statement.
Time Warner Center will be renamed after the media company’s departure, Rose said in an e-mail. Related led a group that in 2004 completed the complex, which Ross once called the 21st century’s equivalent to Rockefeller Center.
Time Warner has been looking to reduce its real estate costs and increase the efficiency of its offices since 2011, when Chief Executive Officer Jeffrey Bewkes told the New York Times its space was an “indulgence.”
Bewkes, in today’s statement, said the move to Hudson Yards “will foster even more collaboration, creativity and efficiency across our businesses.”
The company currently occupies seven buildings in Manhattan, including Time Warner Center, Bewkes said in a memo to employees. Moving into a single location will save about $750 million in real estate costs over the next 20 years, he said.
“We will be able to reallocate substantial savings to our primary business of creating and sharing great storytelling,” Bewkes said in the statement.
In a memo, he said the Hudson Yards tower would house the company’s corporate offices, plus New York-based employees of HBO, Turner Broadcasting, and Warner Bros.
Time Inc. the magazine division that publishes titles including Time, People and Entertainment Weekly, is “working on its own real estate plans” in anticipation of being spun off (TWX:US) this year, according to the memo.
Time Warner’s New York offices include 1100 and 1114 Avenue of the Americas; 120A E. 23rd St., which houses studios and technical space for HBO; and the Time-Life Building, which holds offices of Time Inc., according to its most recent annual report.
Related and partner Oxford Properties Group began construction late in 2012 on the first of its Hudson Yards towers, to be anchored by the luxury goods maker Coach Inc. In April, it signed leases with cosmetics company L’Oreal USA and SAP AG (SAP), the German software firm.
Eastdil Secured LLC represented Time Warner in the sale of the offices. Studley Inc. is working with the company in its acquisition at Hudson Yards. CBRE Group Inc. is Related’s broker in the sale of that space.
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