Bloomberg News

Manhattan’s Socony-Mobil Tower Said on Market for $900 Million

March 18, 2014

The midtown Manhattan office tower known as the Socony-Mobil Building is on the market with an asking price of about $900 million, a person with knowledge of the seller’s plans said.

Hiro Real Estate Co., a Japanese investment firm, is seeking to sell the long-term leasehold, which would give the buyer rights to control the 1.7 million-square-foot (158,000-square-meter) landmark at 150 E. 42nd St., said the person, who asked not to be named because the marketing effort is private.

Centrally located buildings in the world’s financial centers have been commanding buyer interest, even in the face of low yields. The Mobil property occupies an entire city block across the street from the Chrysler Building and half a block east of Grand Central Terminal. The 42-story, steel-clad tower is about 90 percent occupied, according to the person.

“Given the location, a stone’s throw from Grand Central, this is exactly the type of asset the market is clamoring for right now,” said Dan Fasulo, managing director at New York-based Real Capital Analytics Inc., a research firm that tracks commercial real estate sales worldwide.

Fasulo said he expects a “deep and diverse” pool of potential buyers, including real estate investment trusts, foreign investors, wealthy individuals and pension funds.

Wells Fargo

The building has two dominant tenants, Wells Fargo & Co. (WFC:US) and Mount Sinai Hospital, each with about 500,000 square feet, according to the person. The hospital is close to completing a long-term renewal of its rental agreement, the person said.

The owner of a leasehold pays a fee to the landowner in exchange for the right to control the building on the site and collect rents from its tenants. Hiro leases the ground on which the tower stands from the Goelet family, whose investments in Manhattan real estate date to the first half of the 19th century, according to papers in the library of Salve Regina University in Newport, Rhode Island.

The Japanese company has worked out a deal to extend the leasehold for 99 years, said the person with knowledge of the matter.

Calls to Hiro’s New York office and to Louis Frost, an attorney who has represented the Goelet family’s affairs, weren’t returned.

The Mobil tower has about 50,000 square feet of retail space at its base, with Ann Inc.’s Loft clothing chain, CVS Caremark Corp. and Starbucks Corp. among its tenants. The store occupants are paying rents that are well below prevailing rates for the neighborhood, the person said.

Office Rents

Asking office rents in the skyscraper average $58 to $65 a square foot, according to data from research firm CoStar Inc. In the Grand Central submarket, asking rents averaged $64.19 a square foot at the end of February, figures from brokerage Cassidy Turley show.

Douglas Harmon and Adam Spies, brokers at Eastdil Secured LLC, are representing Hiro. Martha Wallau, a spokeswoman for Eastdil, didn’t return a call seeking comment on the offering.

Hiro took over the ground lease from Mobil Corp., predecessor of oil company Exxon Mobil Corp., in 1987, a period when Japanese investors were active buyers of New York real estate, acquiring properties such as Rockefeller Center.

The tower was the largest metal-clad building in the world when it opened in 1956, featuring stainless steel patterns with a “delicate, almost floral” finish, according to a 1995 story in the New York Times.

The building is managed by New York-based representatives from CBRE Group Inc., according to Hiro’s North American website. Philip Russo, a CBRE spokesman, said the brokerage wouldn’t comment on the offering.

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

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


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Companies Mentioned

  • WFC
    (Wells Fargo & Co)
    • $52.1 USD
    • 0.56
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