Sherwood Snaps Up 300,000SF NYC Office for $155M
- Sep 03, 2008
The 307,000-square-foot office building at 370 Lexington Ave. in New York City’s Grand Central submarket has come under new ownership, courtesy of a transaction valued at $155 million. Sherwood Equities Inc., acting in a joint venture with institutional investors advised by JP Morgan Asset Management, acquired 370 Lexington (pictured) from a joint venture consisting of Broad Street Development and Crow Holdings. The deal included Sherwood’s assumption of $80 million in outstanding mortgage debt from CIGNA.For the seller, what a difference two years make. Broad Street and Crow Holdings paid La Salle’s Income & Growth Lexington L.L.C. $97.2 million for the building in 2006. A 26-story tower occupying the southwest corner of Lexington Ave. and 41st St. in Midtown, 370 Lexington sits just one block from Grand Central Terminal. Sherwood will submit the property, presently 92 percent leased, to a capital improvement program and will then market the building as one of Manhattan’s few options for high-quality pre-built office space at Class B prices for businesses seeking less than 10,000 square feet.”Sherwood feels that the small tenant market is an extremely underserved niche in the marketplace,” a Sherwood spokesperson told CPN. “So many of these tenants are attorneys, accountants or other service oriented firms and thus have to be in Midtown, as they serve the larger corporations in the area. As we all know, Midtown has seen a dramatic increase in rental rates in the last few years. As such, many of these tenants that were in larger buildings and had signed leases five years ago are seeing their rents more than double.” Today, the average rent for Class A and Class B space in Midtown is $97.41 and $65.11 per square foot, respectively, according to a second quarter report by real estate services firm Grubb & Ellis Co. And it’s not just the big price tags at the big buildings that have left some businesses in the lurch. “Many of these buildings no longer welcome smaller tenants, let alone cater to them,” the spokesperson said. “At 370 Lex, these tenants will be able to have a Midtown address, with rents far below buildings just a few blocks away, and will be able to have services catered to their needs, such as conference rooms, pre-built suites, concierge services–all within a block of Grand Central.” Real estate services firm Cushman & Wakefield Inc. marketed 370 Lexington on behalf of the seller. Sherwood, which represented itself on the transaction, will handle the property’s leasing internally. Headquartered in New York City, Sherwood is a privately held real estate investment and development company. Developer of Times Square, the 56-year-old company is a major player in the Hudson Yards area and other parts of Manhattan, and is presently expanding its activities across the city.