Paramount Closes on $1.5B NYC Office

Only a day after the finalization of the sale of two Macklowe Properties buildings in Manhattan to Boston Properties, Paramount Group Inc. has closed on another of the buildings Macklowe owned for a while, 1301 Avenue of the Americas. The unconfirmed transaction price, widely reported when the deal was announced early this summer, is about $1.5 billion. The 45-story office tower is on Sixth Ave. in Manhattan (Avenue of the Americas) between 52nd and 53rd streets, giving it a Midtown location. Of early 1960s vintage, the building totals about 1.8 million square feet. Current major tenants include Lehman Bros., investment banker Calyon, and law firm Dewey & LeBoeuf L.L.P. Though retaining title to the seven New York buildings it bought in early 2007 from Equity Office Properties Trust (by way of Blackstone Group L.P. flipping the properties), Macklowe lost control of them this spring to its main creditor, Deutsche Bank, after finding itself unable to refinance the loans it took out to buy the properties. The deal comes at a time of considerable resiliency for the Manhattan office market, sometimes attributed to New York’s status as the hub of international finance. According to Cushman & Wakefield Inc., over the first half of 2008, new leases totaled about 11.5 million square feet in Manhattan, compared with 11.8 million square feet in the first half of 2007. Rents seem to be holding their own as well, with Midtown seeing the highest asking rents of all, an average of $92.30 per square foot as of 2Q08. Still, given projected job losses in the financial services sector for the rest of 2008, that office market resilience could be challenged. The city’s financial sector–banks, brokerages, insurance and real estate companies–lost 2,000 jobs in June, compared with a year earlier, according to the State of New York. Locally-based Paramount Group, which owns about 12 million square feet of office space in New York and in other places, represented itself in the 1301 Avenue of the Americas deal. Eastdil Secured L.L.C. represented the seller.