Regions Northeast | New York
July 22, 2008
By: Barbra Murray, Contributing Editor
The 274,000-square-foot office building at 180 Madison Ave. in Manhattan has officially come under new ownership, courtesy of a transaction between two New York City-based real estate companies.
The Clarett Group, acting in a joint venture with Parsippany, N.J.-based Prudential Real Estate Investors, purchased the 274,000-square-foot building from Sitt Management for $146 million. With the closing of the acquisition of the Midtown South property, Clarett has made its first move in the Manhattan office market game.
Rising 23 stories above the intersection of Madison Ave. and 34th St., 180 Madison last changed hands in 2005 when Sitt bought the building from a joint venture involving SL Green Realty Corp. and Morgan Stanley Real Estate Funds for $92.7 million. Sitt relied on real estate services firm Eastdil Secured to market 180 Madison. Clarett, which has tapped real estate services firm CB Richard Ellis Inc. to oversee managing and leasing responsibilities, will submit the 82-year-old property to an upgrade.
Clarett pointed to 180 Madison's convenient and highly visible location near Grand Central Station and Penn Station, and an anticipated blossoming of the Midtown market over the next several years as reasons for making a play for the property. The Midtown South submarket, the smallest of the three Manhattan submarkets, resembles the rest of the Manhattan office property sector in that, after a long period of tightening and dramatic increases in rents, it is beginning to experience the consequences of a decelerating economy.
However, Midtown South has a dynamic all its own. "In a small market like that, you don't have a lot of large buildings with large blocks of space, and you won't see new buildings; it primarily consists of secondary buildings," Andrew Simon, executive managing director with real estate services firm NAI Global New York City, told CPN today. "The cost of construction is so prohibitive that it's hard to justify new construction today, and the Midtown South market cannot justify new construction because it just cannot get those kinds of rents." The average rental rate is $76.53 in Midtown and $54.75 in Midtown South, according to NAI's second quarter report. "Midtown South won't be immune to the effects of the softening economy, but it won't be impacted by new office buildings. Downtown will have the World Trade Center, which will ultimately impact the market with 10 million square feet, and there's Hudson Yards in Midtown; Midtown South doesn't have that."
Clarett is a leading player in the upscale residential and mixed-use property markets in metropolitan areas including Los Angeles and Washington, D.C. The real estate developer and owner established its joint venture with PREI for the purpose of developing projects in urban areas.
Blog Story Here
By: Barbra Murray, Contributing Editor
The 274,000-square-foot office building at 180 Madison Ave. in Manhattan has officially come under new ownership, courtesy of a transaction between two New York City-based real estate companies.
The Clarett Group, acting in a joint venture with Parsippany, N.J.-based Prudential Real Estate Investors, purchased the 274,000-square-foot building from Sitt Management for $146 million. With the closing of the acquisition of the Midtown South property, Clarett has made its first move in the Manhattan office market game.
Rising 23 stories above the intersection of Madison Ave. and 34th St., 180 Madison last changed hands in 2005 when Sitt bought the building from a joint venture involving SL Green Realty Corp. and Morgan Stanley Real Estate Funds for $92.7 million. Sitt relied on real estate services firm Eastdil Secured to market 180 Madison. Clarett, which has tapped real estate services firm CB Richard Ellis Inc. to oversee managing and leasing responsibilities, will submit the 82-year-old property to an upgrade.
Clarett pointed to 180 Madison's convenient and highly visible location near Grand Central Station and Penn Station, and an anticipated blossoming of the Midtown market over the next several years as reasons for making a play for the property. The Midtown South submarket, the smallest of the three Manhattan submarkets, resembles the rest of the Manhattan office property sector in that, after a long period of tightening and dramatic increases in rents, it is beginning to experience the consequences of a decelerating economy.
However, Midtown South has a dynamic all its own. "In a small market like that, you don't have a lot of large buildings with large blocks of space, and you won't see new buildings; it primarily consists of secondary buildings," Andrew Simon, executive managing director with real estate services firm NAI Global New York City, told CPN today. "The cost of construction is so prohibitive that it's hard to justify new construction today, and the Midtown South market cannot justify new construction because it just cannot get those kinds of rents." The average rental rate is $76.53 in Midtown and $54.75 in Midtown South, according to NAI's second quarter report. "Midtown South won't be immune to the effects of the softening economy, but it won't be impacted by new office buildings. Downtown will have the World Trade Center, which will ultimately impact the market with 10 million square feet, and there's Hudson Yards in Midtown; Midtown South doesn't have that."
Clarett is a leading player in the upscale residential and mixed-use property markets in metropolitan areas including Los Angeles and Washington, D.C. The real estate developer and owner established its joint venture with PREI for the purpose of developing projects in urban areas.
Blog Story Here
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