No, the world isn’t ending — and neither is 360 Park Avenue South, the prewar office tower at East 26th Street where Boston Properties is wrapping up a more than $100 million repositioning and upgrade.
Last week, Canada Pension Plan Investment Board unloaded its 29% stake in 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 worth more than it seemed. Boston reported last month that CPPIB’s exit released it from an additional $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 building owned by one of America’s most successful publicly-traded real estate companies was widely taken as a no-confidence vote in commercial real estate generally.
(CPPIB also sold parts of office buildings in Vancouver and a southern California office park).
It revealed “anxiety among longtime buyers,” a Bloomberg headline said. “Who will be next?” trumpeted several other sites.
The commercial market’s woes from the Battery to Beijing are not exactly secret.
But although the 360 Park Avenue South sale reflects CPPIB’s effort to reduce office exposure as it juggles its vast portfolio, it says nothing about the value of the building 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 wish to be named used similar words. One at a different 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 sole tenant — business information company RELX — planned to leave at the end of 2021.
Boston saw it as a golden opportunity to exploit the appeal of Midtown South, which was increasingly attractive to tech and media companies.
So it created a new ground floor, new lobbies, and what Turchin called a “huge amenity center” and lounge underground.
There are also significant new power and airflow systems.
But 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 giant wooden water tank with a sculptural presence.
Boston estimates in its most recent 10-K SEC filing that although it’s currently only 18% leased, 360 Park Avenue South will be “stabilized” by the fourth quarter of 2025.
The first 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 first retail lease was also high-profile, when Saga Hospitality Group took 7,000 square feet for a new restaurant from chef James Kent. It’s scheduled to open in the fall.
The company, 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 year 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.”
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