Considered to be a bottom of the market deal, in July of 2008 the first two floors of 666 Fifth Avenue sold for $525 million to private equity firm Carlyle and Crown Acquisitions ("Crown"), as reported in the Wall Street Journal's article "Fifth Avenue Gem Is Back on Block." Carlyle and Crown have added value by buying out existing tenants with below market leases and re-leasing at higher market rents. Currently, 666 Fifth Avenue has an average rent of $2,500 per square foot.
Carlyle and Crown are now seeking to sell the first two floors for a price of between $600 million and $700 million. This will test New York City's decimated commercial real estate market. If they are able to obtain a 14% to 33% markup on their investment, the sale will signal that New York's commercial real estate market is on the rebound. It would also add between $18 million and $21 million to the city's coffers due to the 3% transfer tax.
SL Green Realty Corp. recently stated that it was purchasing 600 Lexington Avenue for $193 million and Carlos Slim agreed to pay $140 million for an 11-story office tower on Fifth Avenue.
Matthew L. Holden is a New York real estate lawyer representing clients throughout New York and New Jersey. Founded by Matthew L. Holden, The Law Offices of Matthew L. Holden, LLC is located in Hackensack, New Jersey.
