By Holly Dutton
RXR Realty has partnered with an affiliate of Walton Street Capital to purchase 237 Park Avenue from an entity controlled by Lehman Brothers Holdings Inc.
The sale price was $800 million, according to the Wall Street Journal, a bargain according to Scott Rechler, chairman and CEO of RXR Realty.
“It is rare that you can purchase a modern office building in such an irreplaceable location at such a significant discount to replacement cost,” said Rechler.
“We look forward to re-energizing 237 Park with a transformative re-development that positions it as one of the most attractive 21st century space alternatives in the Park Avenue/Grand Central market.”
Located in the Grand Central District, between 45th and 46th Streets, 237 Park Avenue is steps from Grand Central Terminal and all major transportation. The 21-story building has 1.25 million square feet of Class A office space and is 80 percent occupied.
RXR plans to make extensive renovations to the building that will include new entrances from Park Avenue and 45th Street, a new lobby and redesigned atrium, new elevator cabs and enhanced retail throughout the first two levels of the building.
Plans also call for a new glass curtain wall enclosure on the two top floors of the building, allowing for floor-to-ceiling windows.
RXR has been one of the most aggressive real estate buyers in recent years. Last year, it signed new and returning tenants to leases for more than two million square feet of office space.
“While it has been a tough year economically for the country and the region, demand continues to grow for the highest quality buildings with stable landlords in submarkets where tenants want to operate,” said Rechler.
“Our success in 2012 in leasing more than two million square feet highlights this. Our portfolio of more than 18 million square feet of high-quality, well-located buildings throughout the New York tri-state area have clearly benefited from this demand.”
The acquisition of 237 Park Avenue brings the company’s New York portfolio to more than seven million square feet.
The building “rounds out the product type that we have to offer to all types of tenants,” said William Elder, executive vice president and managing director, NYC for RXR Realty.
“We now have the ability to focus on high-end technology, service and financial companies looking for space in excess of 60,000 to 120,000 s/f in the heart of midtown.
“This acquisition will complement our current midtown assets, which cater to boutique financial and hedge-fund type tenancies, and our midtown south properties, which are desirable to a variety of creative companies.”