Behind Manhattan’s Largest Deal of the Year

Hudson Commons. Image courtesy of Cove Property Group

In another testament to the investment community’s faith in the NYC market, Cove Property Group and The Baupost Group have closed on Manhattan’s largest office sale since the onset of the pandemic and the only such deal to surpass $1 billion.

CommonWealth Partners purchased Hudson Commons, a 25-story trophy tower situated at 441 Ninth Ave. from the joint venture partners in a transaction arranged by CBRE. Cove Property Group and The Baupost Group had picked up the asset in 2016 for $330 million, according to CommercialEdge, and sold the property for $1.033 billion.

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Manhattan has been struggling to regain its shine since the pandemic emptied out offices and a sequence of new virus strains postponed a definite recovery for the office sector. Year-to-date through September, office transaction volume was down to one-third of 2019’s volume and half of 2020 levels.

Up until now, the largest office transaction of the year in Manhattan was SL Green Realty Corp.’s $952.5 million sale of the 636,000-square-foot, Amazon-anchored 410 Tenth Avenue—also in the Hudson Yards area. Wells Fargo Bank backed the buyer, 601W Cos., with a $565 million loan.

Back in September, two major deal announcements offered glimpses of hope for the sector. Google committed to purchasing the 1.3 million-square-foot St. John’s Terminal for $2.1 billion, while German investor Commerz Real announced the $850 million acquisition of the nearly 1 million-square-foot 100 Pearl St. in the heart of the Financial District.

A successful overhaul

Following the 2016 purchase, the former owners repositioned the 1980s eight-story brick factory building at 441 Ninth Ave., situated at the intersection of Hudson Yards and Manhattan West, into a sustainable office asset. The adaptive reuse project included the addition of 18 new glass and steel stories atop the original warehouse structure.

The overhaul earned LEED Platinum certification in 2020, along with other two other Manhattan properties and is still one of only four buildings to earn this prestigious acknowledgement in New York City.

Hudson Commons offers 14 outdoor terraces, as well as 30,000 square feet of conference facilities and meeting rooms. The property includes 16,000 square feet of ground-level retail and was 75 percent leased at the time of the sale. The building is anchored by fitness company Peloton, which occupies 312,000 square feet, and ride share company Lyft, which signed up for 100,638 square feet back in 2019.

CBRE’s Darcy Stacom and Bill Shanahan led the property’s marketing strategy. The duo, along with Doug Middletonand Alana Bassen, also worked on behalf of Cove in closing the sale.