Eastern sells 300 Park Avenue South.

As office vacancy rates throughout the city continue their downward trend and rents continue their gradual and steady increase, Midtown South is arguably still the hottest office leasing market in Manhattan.

In addition to area mainstays such as Metropolitan Life, New York Life and now Credit Suisse First Boston, many other established, credit-worthy tenants are scouring the area for available blocks of space. The departure of Guardian Life from its headquarters building at 201 Park Avenue South and the subsequent conversion of that building into a hotel will remove one of the only significant blocks of vacant space from the office inventory, further tightening the market and leaving the vacancy rate standing at under three percent.

Building owners in this highly sought after submarket recognize the substantial increases in rents and the absorption rate of available space to date as the best indicators of the area's strength. Rental rates in prime sections of the district and especially along Park Avenue South are now moving into the mid-$30 per square foot range. Owners also perceive the potential for future growth, since space in the area is still being offered at a significant value relative to higher rates in Midtown. Accordingly very few prime avenue buildings have been offered for sale in recent years, until this summer, when Emmes Asset Management Corp and Apollo Real Estate Advisors decided to put their building at 300 Park Avenue South on the market.

In one of the only recent sales of an avenue office building along Park Avenue South, Brian Ezratty, senior executive director and principal at Eastern Consolidated Properties, and Peter Hauspurg, Eastem's chairman and CEO, have sold the 14-story 173,000 square-foot Class A office building at the corner of 22nd Street and Park Avenue South on behalf of Emmes and Apollo.

According to Ezratty, "There is still tremendous strength in the sales market, and the interest in 300 Park Avenue South was incredibly strong."

The initial asking price for the property was $35 million, or approximately $200 per square foot. "Bidding was intensely competitive in what ended up being one of our most rapid marketing campaigns in recent months," said Ezratty. "Once we released news of the pending sale to the market, we immediately began receiving calls from both well-known New York City property owners, as well as qualified new-comers to the market."

There were 10 bids over $32 million. Four of those were over $33 million, which is a bid/ask spread of about 6 percent. The sale closed at close to $34 million, and the time between contract and closing was less than 30 days.

"We were fortunate to have had a quality asset out in the market with excellent market conditions, and to have chosen the right purchaser, who was able to demonstrate without a doubt his ability to perform."

Park Avenue South has long been a haven for companies in the "creative industries" such as graphic arts, advertising, publishing and architecture, and has recently attracted many well-capitalized companies in the informationtechnology, Internet-related and telecommunications fields. The ultimate purchaser of 300 Park Avenue South procured by Ezratty ended up being a well-known local residential developer looking to secure ownership in an asset well-located to service those industries.

Many perceive these companies to be the wave of the future in the demand for quality office space in the city.

The property at 300 Park Avenue South is currently 100 percent leased to credit tenants, most of whom have signed long-term leases. There are three full contiguous floors that become available by the end of 2000, providing an opportunity to lease 34,200 square feet of prime, contiguous space and to capitalize on the upswing in market rents.

Even as the sales process was ongoing, there was significant leasing interest in the property from incumbent tenants, as well as others in the market looking to locate or relocate in the area.