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SL Green unveils next step in Grand Central plan.

Many in the real estate industry scratched their heads last summer when SL Green Realty Corp. boldly purchased the interconnected and soon-to-be largely vacant Grand Central office buildings at 485 Lexington Avenue and 750 Third Avenue for $480 million from TIAA-CREF, the national financial services company.

After all, since no developer in his right mind would ever consider building a million square foot "spec" office tower in the current New York City marketplace, why would SL Green buy what amounts to a ready-made spec building?

The answer will soon be apparent. SL Green, New York City's largest commercial property owner with over 17 million square feet of office and retail space, is about to launch a sweeping $90 million redevelopment program that will transform the 2-building, 1.7 million square foot complex into a single entity know as "Grand Central Square."

It will create the single largest contiguous block of available office space--approximately 1.1 million square feet--in the prime midtown business district.

Completed in the mid to late 1950's, the 31-story 485 Lexington Avenue and the 34-story 750 Third Avenue were built back to back and together occupy a full city block, from 46th and 47th Streets between Lexington and Third Avenues.

TIAA-CREF, which will vacate all of 485 Lexington's 900,000 square feet by the end of the year as it relocates many of its operations to Charlotte, NC, is also moving out of 200,000 square feet comprising the tower floors (18-34) at 750 Third Avenue.

"We felt confident last summer that the Manhattan leasing market had bottomed out and would soon begin a turnaround,' stated SL Green Chairman Stephen L. Green.

"While many disagreed, we felt there was a lot of upside to buying vacant space, particularly in the Grand Central district."

With office leasing activity now rebounding and large contiguous blocks of available space at a premium throughout the city, the 485 Lexington/750 Third purchase at $282 a foot is "looking better everyday," admits SL Green President and CEO Marc Holliday, who notes that his company has appointed Cushman & Wakefield as co-leasing agent with SL Green for the TIAA-CREF space and early interest "is very strong."

Some of the highlights of the capital improvement program soon to begin at Grand Central Square include a new facade (4,000 tinted windows will be installed and 485 Lexington's silver mullions will be eliminated to create a sleek and uniform dark blue exterior), a dramatic new entranceway and lobby, and striking new Lexington Avenue storefronts. New elevators, bathrooms and upgraded security are also planned. Dan Shannon of Moed, De Armas & Shannon is the architect for the project.

In an indication of its broad based marketing strategy, SL Green COO Gerry Nocera said that in addition to custom office installations, the landlord was prepared to build-out spectacular trading floors by eliminating existing floor slabs and creating two-story ceiling heights.

The property's infrastructure is already "institutional quality" thanks to a $38 million upgrade carried out over the past six years by TIAA-CREF.

SL Green, whose other Grand Central properties include the Graybar Building at 420 Lexington Avenue, 110 East 42nd Street and 711 Third Avenue, has just completed construction of a "Marketing Floor" at 485 Lexington where all of the finishes, materials, amenities and plans for Grand Central Square are on display.
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Title Annotation:SL Green Realty Corp.
Publication:Real Estate Weekly
Geographic Code:1USA
Date:Mar 2, 2005
Previous Article:City sells Bronx lot.
Next Article:BIDs put sparkle back into commercial neighborhoods.

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