405 Park Ave. Gets Two New Owners, Plans for a Makeover
- May 06, 2016
New York—MRP Realty, which made its entry into the New York City commercial real estate market less than a year ago, has scored again, teaming up with Deutsche Asset Management’s Alternatives and Real Assets business to purchase 405 Park Ave.
The partners did not release the price paid for the 17-story, mixed-use office and retail building in Manhattan’s Plaza District, but Crain’s New York Business previously reported it would be sold for about $240 million. The seller was Donerail Corp., which had owned the 175,000-square-foot building since 1981, according to The Real Deal. The building was at the center of a lawsuit between Donerail and a team of previous would-be buyers–Steve Witkoff, Larry Gluck and Westbrook Partners. The investors had planned to buy the building on the corner of E. 54th St. in 2007 for $178.5 million but backed out after the 2008 economic downturn. The investors lost their $38.6 million down payment, sued to get it back and lost their case in 2012, Crain’s and The Real Deal reported.
In a city where the commercial real estate market has been on the upswing in recent years, Park Avenue is still the leading office corridor and the Plaza District submarket continues to have the highest average rents in New York City. Rents can easily top $100 per square foot and reports are circulating that the owners of nearby 425 Park Ave. are seeking rents of at least $300 feet for the building that is under construction. JLL, in its Q1 2016 Office Statistics report for New York City, reported that the highest average asking rent for Class A office properties in the Plaza District was $90.70 per square foot, compared to $83.59 per square foot for the overall Midtown highest average asking rent and $79.54 per square foot for the overall New York City Class A office average.
The new owners of 405 Park Ave. said they are planning to invest in upgrades to the property but did not provide details or estimated costs.
“The investment is viewed as an opportunity to create value through the implementation of a renovation program which will improve 405 Park’s market position as a boutique, Class A asset,” Todd Henderson, head of Real Estate in the Americas for Deutsche Asset Management’s ARA business, said in a prepared statement. “This is a rare opportunity in one of the world’s premier office markets.”
Ryan Nelson, managing director of MRP Realty, the Washington, D.C.-based firm with offices in New York and Philadelphia, added that they were “thrilled to partner with Deutsche Asset Management on this unique investment and look forward to repositioning the building to trophy quality, in a trophy location.”
This is not MRP’s first purchase in Manhattan. In September, the firm formed a joint venture with Long Wharf Real Estate Partners to acquire 133 W. 52nd St., the former Flathotel that was renovated and repositioned by the Chetrit Group, for approximately $36.3 million. They expect to lease the property to a variety of tenants, including corporate users, creative tech companies, retailers and medical companies.
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