No, the world isn’t ending — and neither is 360 Park Avenue South, the prewar office tower at East twenty sixth Street where Boston Properties is wrapping up a greater than $100 million repositioning and upgrade.
Last week, Canada Pension Plan Investment Board unloaded its 29% stake within the tower for exactly $1.
The lucky payer of that dollar, Boston Properties, bought the 1913-vintage, 440,000 square-foot tower with partners in 2021 for $300 million.
The “sale price” was actually value more than it seemed. Boston reported last month that CPPIB’s exit released it from a further $46 million commitment to the redevelopment project on which it already spent $71 million.
That CPPIB — one of the world’s largest property owners — would dump its interest in a constructing owned by one of America’s most successful publicly-traded real estate corporations was widely taken as a no-confidence vote in industrial real estate generally.
(CPPIB also sold parts of office buildings in Vancouver and a southern California office park).
It revealed “anxiety amongst longtime buyers,” a Bloomberg headline said. “Who can be next?” trumpeted several other sites.
The industrial market’s woes from the Battery to Beijing usually are not exactly secret.
But although the 360 Park Avenue South sale reflects CPPIB’s effort to scale back office exposure because it juggles its vast portfolio, it says nothing concerning the value of the constructing itself.
It isn’t only CBRE’s Peter Turchin, the tower’s chief leasing agent, who says the fund’s exit means “zero.”
Other brokers who didn’t want to be named used similar words. One at a distinct firm told us, “It’s a plum. I wish it was our agency.”
Boston knew the tower would soon be empty when it bought it, as the only tenant — business information company RELX — planned to depart at the tip of 2021.
Boston saw it as a golden opportunity to use the appeal of Midtown South, which was increasingly attractive to tech and media corporations.
So it created a latest ground floor, latest lobbies, and what Turchin called a “huge amenity center” and lounge underground.
There are also significant latest power and airflow systems.
However the cool-factor highlight is a brand-new, furnished and landscaped 13,000 square-foot roof deck available to all tenants that’s centered around a large picket water tank with a sculptural presence.
Boston estimates in its most up-to-date 10-K SEC filing that even though it’s currently only 18% leased, 360 Park Avenue South can be “stabilized” by the fourth quarter of 2025.
The primary office tenant signed on last summer as we first reported — wealth management firm Iconiq Capital, which doubled its Manhattan presence with a hush-hush, 70,000 square-foot lease on floors 18-19.
The primary retail lease was also high-profile, when Saga Hospitality Group took 7,000 square feet for a latest restaurant from chef James Kent. It’s scheduled to open within the fall.
The corporate, which owns acclaimed Crown Shy and Saga at 70 Pine St. downtown, is celebrating its fifth anniversary this month.
Turchin said he was “trading paper” with a number of prospective office tenants. Asking rents range from $90-110 per square foot, he said.
A 12 months ago, he said, the neighborhood’s “tech boom was real. But now we’re finding that financial firms are discovering it too, as Iconiq’s lease proves.”