Marcus & Millichap Real Estate Investment Services has arranged the sale of the Art & Design Building at 1059 Third Ave. in Midtown Manhattan for $31.5 million or $1,416 ppsf, setting a new price per square foot record for East Midtown commercial real estate. The sale was an all-cash transaction.
Tanya Siegeal and Kailin Zhu, investment specialists in the firm’s Manhattan office, represented the seller. J.D. Parker, vice president and regional manager of the Manhattan office and the firm’s broker of record for New York State, also assisted in closing the transaction. The buyer was represented by Massey Knakal.
“This sale marks a record price per square foot in East Midtown since 2008,” said Siegel. “The buyer plans to demolish the building and redevelop it into a high-end condominium project. Condo sell-off prices in this neighborhood currently exceed $2,000 per square foot,” adds Siegel.
According to the brokers, several investors expressed interest in the Art & Design Building, including high-net worth individuals, institutions and foreign investors.
“We exclusively marketed this asset aggressively and the process we implemented ultimately erupted into a bidding war,” said Parker.“With over 30 qualified buyers competing for this property, the seller was able to negotiate excellent terms, including a 30-day, all-cash close.”
Located in a busy retail corridor with heavy pedestrian traffic on the east side of Third Avenue between 62nd and 63rd Streets, the five-story Art & Design Building has 50 feet of frontage and 22,250 rentable square feet of office and showroom space with one retail store. The property is accessible to public transportation.
“This is an irreplaceable location with close proximity to Trump Plaza, Bloomingdale’s and the Bloomberg Building,” said Zhu. “It is also just steps away from a new subway entrance for the Second Avenue Subway line, which is scheduled to open in 2014,” she noted.
The property is currently zoned C1-9 (R10) with a maximum allowed FAR of 10. The property FAR as-built is 4.23 and has 30,250 square feet of untapped development rights, yielding $600 per square foot for a gross approximate developable square footage of 52,500.Demand for quality assets in Manhattan has reached an all-time high since the recession.
“With unresolved financial difficulties in Europe, multinational investors are withdrawing capital from overseas banks and re-deploying capital into cash-flowing properties in the city,” said Parker. “Since the start of the debt crisis, foreign institutions have parked nearly $1 billion in top-tier commercial properties in Manhattan, including $350 million year to date.”