No, the world hasn’t ended. That’s not the end of 360 Park Avenue South, the prewar office tower on East 26th Street that Boston Properties is completing over $100 million in relocation and renovation.
Last week, the Canada Pension Plan Investment Board unloaded its 29% stake in Tower for just $1.
The lucky payer of that dollar, Boston Properties, purchased the vintage 440,000-square-foot tower, built in 1913, with partners in 2021 for $300 million.
The “sale price” was actually worth more than I expected. Last month, the City of Boston reported that CPPIB’s departure freed it from committing an additional $46 million to a redevelopment project that had already cost $71 million.
CPPIB, one of the world’s largest real estate owners, relinquishing its interest in a building owned by one of America’s most successful publicly traded real estate companies is widely seen as a vote of no confidence in commercial real estate in general. It was accepted.
(CPPIB also sold some office buildings in Vancouver and an office park in Southern California).
A Bloomberg headline said it revealed “long-standing buyer fears.” “Who Will Be Next?” I advertised it on several other sites.
The woes of commercial markets from batteries to Beijing are not exactly a secret.
But while the sale of 360 Park Avenue South reflects CPPIB’s efforts to reduce its office exposure while juggling its large portfolio, it says nothing about the value of the building itself. Not yet.
Peter Turchin, CBRE’s chief leasing agent for the tower, is not alone in arguing that the fund’s exit means “zero.”
Another broker, who did not want to be named, used similar language. A person from another company said, “This is a plum.” I wish it was our agency. ”
Boston knew when it bought the tower that it would soon be empty, as its only tenant, business intelligence company RELX, was scheduled to move out at the end of 2021.
Boston saw a great opportunity to capitalize on the appeal of Midtown South, which is increasingly attractive to technology and media companies.
So they created a new ground floor, a new lobby, and what Turchin called a “huge amenity center” and lounge in the basement.
There are also significant new power and airflow systems.
But the highlight of the cool factor is a brand new, fully furnished and landscaped 13,000 square foot rooftop deck available to all tenants, centered around a giant wooden aquarium with a sculptural presence.
In its latest 10-K SEC filing, the City of Boston estimates that 360 Park Avenue South will be “stabilized” by the fourth quarter of 2025, although it is currently only 18% leased.
As we first reported, the first office tenant was signed last summer with asset management firm Iconic Capital, which will secretly lease 70,000 square feet on the 18th and 19th floors in Manhattan. doubled its presence.
The first retail lease also attracted attention when Saga Hospitality Group leased 7,000 square feet for chef James Kent’s new restaurant. It is scheduled to open in the fall.
The company, which owns the acclaimed Crown Shy and Saga at 70 Pine Street downtown, celebrates its fifth anniversary this month.
Turchin said he has “paper deals” with many potential office tenants. He said asking rents range from $90 to $110 per square foot.
A year ago, “the technology boom was real” in the region, he said. But now, as the Iconiq lease proves, financial companies are starting to realize that, too. ”
