New Co-Owner, New Big Lease for 1 Park Ave.

March 4, 2011
By Barbra Murray, Contributing Editor

Big purchases, big leases. Activity in New York City commercial real estate market continues to pick up pace and recent deals at One Park Ave. helped continue the trend. In simultaneous transactions, Vornado Realty Trust acquired a 95 percent stake in the 933,300-square-foot Midtown Manhattan office tower and a major tenant doubled its occupancy in the building under a new lease agreement.

Vornado acquired the majority stake in the 20-story One Park Ave., leaving Murray Hill Properties, which had acquired the asset in 2007 for $550 million, with the remaining 5 percent interest. Neither Vornado nor Murray Hill would confirm the financial details or comment on the transaction; however, published reports indicate that the property, originally developed in 1925, was recapitalized to the tune of approximately $180 million.

The change in ownership was just one deal involving One Park Avenue this week. Commercial real estate services firm Cushman & Wakefield Inc. orchestrated a new 21-year lease agreement that increased NYU Langone Medical Center’s occupancy in the building by approximately 180,500 square feet to an aggregate 367,600. NYU Langone will have space on floors 6 through 8, the 10th and 11th floors and floors 16 through 18.

The sizable lease is indicative of change. Manhattan’s office market experienced a year-over-year decrease in its overall vacancy rate, dropping from 11.1 percent in the fourth quarter of 2009 to 10.5 percent in the fourth quarter of 2010, according to a Cushman & Wakefield report. “We’re watching a recovering market,” Bruce Mosler, the firm’s chairman of global brokerage, told CPE. “We’re seeing growth in health care, education, technology. These are signs of a recovery.”