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Verizon's 6th Ave. HQ could fetch $500m.

In an effort to downsize and consolidate its labyrinthine Manhattan real estate portfolio--which is scattered in over 70 different locations throughout the city--Verizon is selling the majority of 1095 Avenue of the Americas, its current headquarters, and will relocate major portions of its offices and switch operations downtown to 140 West Street.

Opening round bids for the 42-floor, 1.2-million s/f tower were due late last week and are expected to climb to, or even start at, around $400 per s/f, which could bring the price close to $500 million. Verizon however, does plan to retain space in the property in the form of some switching stations, a factor that may cut slightly into the building's expectedly lofty price tag.

"It's not clear exactly how much space we will keep, but there are some floors that have switching equipment in them which we will probably maintain at that site," said Verizon spokesman Peter Thonis. "We're not going to do a sale-lease-back deal, we're going to continue to own a portion of the building. But certainly most of the building is available."

The Verizon Building enters the market at a time when the kind of large contiguous blocks of class A Midtown office space that it possesses are becoming a hot commodity. Consequently, the property has drawn interest from nearly all the big players in Manhattan real estate, including REITs SL Green, Vornado, Reckson, and Equity Office, private equity sources such as L&L Acquisitions and Tishman Speyer, top individual investors Ed Minskoff, Joe Moinian and Joe Chetrit, and also opportunity funds, Walton Street and the City Investment Fund.

"It would surprise me if even one of them hasn't taken a careful look at this building," said a top investment sales broker not involved in the transaction. "Interest in this property is tremendous. The sale could wrap up within a week."

The value of 1095 was the very thing that led to its disposition.

"If you know you have too much space and you can afford to shed a building, aren't you better off shedding a building that you think you can get the maximum price for?" Thonis said.

According to Thonis, Verizon will begin relocating roughly 1500 of its employees at 1095 to 140 West Street by the end of 2005. 140 West Street, a 32-floor, 1,171,540 s/f brick building built in the 20s and owned by Verizon, had its non-Verizon tenants cleared after the property sustained extensive damage from Tower 7's collapse on 9/11. Now that 140 West Street is fully repaired, Verizon will be the sole occupant of the property--which has both office space and switching stations.

Verizon will relocate other portions of its offices located at 1095 Ave. of the Americas to areas outside the city, possibly to New Jersey.

CB Richard Ellis's Bob Alexander is representing Verizon in the sale of 1095 Ave. of the Americas.
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Title Annotation:headquarters; Verizon Communications Inc.
Author:Geiger, Daniel
Publication:Real Estate Weekly
Geographic Code:1USA
Date:Feb 2, 2005
Words:486
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