At the beginning of 2019, the Chrysler Building, one of the most prominent landmarks in the world, was announced to have hit the market for a new owner. As previously reported, The Abu Dhabi Investment Council, which owned a 90 percent ownership stake in the property, together with longtime New York developer Tishman Speyer, decided to put the iconic Chrysler Building up for sale.
The deal closed at the beginning of March and the building sold for no more than $150 million, at a substantial loss compared to the hefty $800 million Abu Dhabi had initially invested in its stake in July 2008, right before the recession.
The new ownership of the building is split equally between New York-based RFR Holding and Austrian real estate investment and development company Signa Holding GmbH, each holding a 50 percent stake in the asset.
Per sources close to the deal, the main reasons for the huge discount price were closely linked to the building’s vacancy rate, which is expected to go up by 30 percent, or approximately 400,000 square feet in the coming years. Another factor was a significant price increase of the land it sits upon. The Cooper Union school reportedly increased its annual ground lease payment requirements from $7.75 million to $32.5 million in 2018 and expects the fee to rise to $41 million by 2028.
The new owners of the 1930s-built Art Deco office tower might also be looking at significant upgrade and renovation expenditures, as the building will have to attract new and more diverse tenants in order to boost rental rates.
Located at 405 Lexington Ave., the William Van Alen-designed building was completed in 1930 and spans across 77 stories, boasting approximately 43,000 square feet of diverse retail space. Adding to its fame, it was also featured in several Hollywood blockbuster movies, including “Men in Black 3,” “Fantastic Four: Rise of the Silver Surfer,” “Spider-man” and “Armageddon,” to name a few.
CBRE’s Darcy Stacom and William Shanahan represented the sellers of the landmark tower in the transaction.
All images are courtesy of Yardi Matrix.