General Growth Properties Picks Up 26-Story Property in Manhattan
- Apr 23, 2015
General Growth Properties, Inc. has teamed with Jeff Sutton on the acquisition of the historic Crown Building, a 26-story retail and office property located on the southwest corner of 57th St. and 5th Ave. in Midtown Manhattan’s Plaza District, for $1.7 billion.
The deal was partly funded with secured debt via a $1.25 billion mortgage delivered by four lending titans—Citigroup, Deutsche Bank, Goldman Sachs, and Morgan Stanley.
GGP and Jeff Sutton will own, redevelop, lease and manage the retail portion of the property, which currently houses tenants including Bulgari, Piaget and Mikimoto.
Constructed in 1921 and designed by Warren and Wetmore, the building was originally named the Hecksher Building in honor of its developer, August Hecksher. The Crown Building is known for having one of Midtown Manhattan’s most notable rooftops, thanks to its illuminated, striking 416-foot high crown, which is why the name was changed in 1983.
“Jeff Sutton and GGP’s acquisition, at nearly $4,490 per square foot, is a record setting transaction involving an individual asset,” Michael Lagazo, senior advisor, retail, with Sperry Van Ness, told Commercial Property Executive. “General Growth will be able to capitalize on the improving fundamentals of this premium retail corridor attracting global brands and commanding superior rental rates.”
Total sales volumes for the retail sector at the portfolio and entity-level remain unchanged since the first quarter of 2014, per Real Capital Analytics in its Q1 2015 report. However, the sales of individual assets posted 16 percent growth from a year earlier.
Additionally, Vladislav Doronin’s Capital Group and Michael Shvo are acquiring approximately 290,000 square feet of the building—from the fourth through the 24th floor—for $500 million. The office tower space on these floors will be redeveloped into luxury residential condominiums.
“It’s unbelievable what’s happening on 57th St. in general,” Joe Koicim, Marcus & Millichap’s vice president of investments, told CPE. “It’s all about timing. The ultra luxury market definitely softened up a little bit and there’s a lot of liquidity out there. If you can buy a trophy asset in that location it’s a no brainer. A lot of people feel the retail alone is worth that much.”