522 Fifth diamond in rough.

1211 Avenue of the Americas, the 44-floor 1.85 million s/f class A building whose $1.5 billion sale in recent weeks was the second largest single asset trade of all time, grabbed headlines but didn't generate much surprise for its whopping $800 per s/f price tag.

Yet the nearly fully-leased property, which is known as a marquee building along an avenue that has become one of midtown's hottest submarkets, shares something in common with another recently sold building that, outwardly, would appear to be of a different ilk. While its $420 million price didn't inspire the same wow factor as a sale of a billion dollars plus, 522 Fifth Avenue, the 23 story, 600,000 s/ f building that was the longtime home of JP Morgan Chase, traded for not much less per s/f than 1211 Avenue of the Americas.

What makes the comparison more dramatic is that, at the time of its sale in early May, 522 Fifth Avenue was essentially a vacant building because of JP Morgan Chase's much publicized imminent departure.

1211 Avenue of the Americas on the other hand has little, if any, vacancy and its largest tenant, News Corp., which occupies roughly 1 million s/f, has a lease running through 2020, a term that in the world of office leasing is considered a long time. But its upside potential is also limited by the fact that so much of its space is tied up for such an extended period. As evidenced by the sale of 522 Fifth Avenue, which although it occupies a desirable niche as a boutique class A building doesn't have the same cache of a landmark building like 1211 Avenue of the Americas, vacancy has become an asset in the commercial real estate sales market.

Manhattan based Broadway Partners, who purchased 522 Fifth Avenue from a partnership between Stellar Management and the Rockpoint Group, gambled that their aggressive offer would pay off if they could capitalize on the ongoing trend of escalating rents in Manhattan and lease the building at rates that, just a year ago, would seem out of range. The firm did just that in a deal with Morgan Stanley, who leased the entire building in June for rents reported to be in the $80s per s/f.

Although the purchase price of 1211 Avenue of the Americas yields a 4% cap rate, so low that in the short term its new owners are likely to be losing money because the building's mortgage payments almost certainly eclipse its cash flow, an increased level of vacancy could have netted the building an even higher sales price. Historically it has been the other way around. The stronger a building's tenants and occupancy were, the more money it could garner in a sale. With average rents in the low $50s per s/f, 1211 Avenue of the Americas seems poised to miss out on the current period of triple digit rents that high end class A properties are now routinely getting for tower space. The building does have roughly 600,000 s/f rolling over in the next six years, however, a source revealed, space that will likely be absorbed by News Corp., whose appetite for expansion space has made it something of a guaranteed taker of any significant availability--a fact that may have added to the building's price.

Because of the leasing schedule, the new owners, a partnership between Beacon Capital and Lehman Brothers, likely will have to extend their investment horizon for the building up to ten years, some investment sales brokers say, well past the more typical 5-7 year hold period for institutional investment in commercial real estate.

Eastdil Secured broker Doug Harmon, handled the sale of both properties but could not be reached for comment.