The Chrysler Building, one of New York’s most iconic skyscrapers, is being taken over and upgraded as demand for luxury office space in the city booms.
The building, a fixture of the New York City skyline for nearly a century, had fallen into disrepair and is less than 50 per cent occupied. Commercial real estate company Tishman Speyer and investment partners have agreed a deal with private college Cooper Union, which has always owned the land the building stands on, for $235mn as well as ground-lease payments.
The low price tag for the landmark indicates the state it is in. In 2008, the government of Abu Dhabi bought a 90 per cent stake in the building for $800mn; just over a decade later, it was sold to real estate companies Signa and RFR for just $150mn.
That figure also reflects the climbing rents that Cooper Union has been charging ground-lease holders. Current rent has not been disclosed, but in 2018 annual rent rose from $7.75mn to $32.5mn.
“We are pursuing an ambitious plan for the Chrysler Building at a historically strong moment for the Manhattan office market,” Tishman Speyer chief executive Rob Speyer said on Wednesday.
Speyer’s company plans on restoring the 77-storey Midtown building, featured in films including Spider-Man and Men in Black 3, at a time when its neighbours have secured expensive leases from financial and law firm tenants.
The Art Deco tower is less than a five-minute walk from Grand Central station, an area that has had a resurgence as companies attempt to shorten employees’ commutes. The area’s revival has been fuelled by the new JPMorgan Chase headquarters just blocks away, raising the bar for luxury office space.
“The Chrysler Building enters a market with few alternatives for companies seeking a high-quality, amenity-filled environment directly above Grand Central Terminal,” Tishman Speyer said in a statement.
The building was constructed almost 100 years ago to house the Chrysler Corporation. For a year it was the world’s tallest building before conceding the title to the Empire State Building. Tishman Speyer, which also owns and operates the Rockefeller Center, will restore its facade and polish and renew the scalloped crown that sits atop it.
The number of leases signed for Manhattan office space priced at $100 or more per square foot shot up to an all-time high last year, according to data from brokerages JLL and CBRE.
Manhattan’s office leasing volume this year totals 32.9mn square feet, marking its strongest year-to-date period since 2000, when 40.1mn square feet was recorded, according to a quarterly report published by Colliers on Wednesday.