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This Week’s N.Y. Deal Sheet: 675 Third Ave. Under Contract For $100M-Plus

A 32-story office tower on Third Avenue is under contract to sell for more than $100M but may not end up as the residential conversion its sellers envisioned when they put it on the market.

David Werner, who is already working on the city’s largest office-to-residential conversion at Pfizer’s former headquarters with Metro Loft Management, signed papers to buy 675 Third Ave. from The Durst Organization, The Real Deal reported.

Werner is in talks with Metro Loft to convert the building, according to TRD. But the 340K SF office tower, which sits between Grand Central Station and the United Nations headquarters, is still roughly two-thirds occupied. Tenants in the 1966-era building include law firm Binder & Schwartz and financial firm Elite Financial Solutions, Commercial Observer reported.

Adam Spies, Adam Doneger, Douglas Harmon, Marcella Fasulo and Avery Silverstein of Newmark are among the brokers negotiating the deal, according to CO. 

TOP SALES

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675 Third Ave. is reportedly under contract to sell for more than $100M.

A second sale of a potential office-to-residential conversion took place on Third Avenue this week. The Kaufman Organization is offloading 767 Third Ave. to Metro Loft Management for $88M, PincusCo reported.

The purchase was bankrolled by an $88M loan from Bank Hapoalim, with the deal closing last week. Kaufman’s Sage Realty had been trying to sell the property since May, when it was roughly 50% occupied, The Real Deal previously reported.

In November, Quantum Pacific planned to buy the building, Commercial Observer reported at the time. But the deed for the 286K SF building, signed on Jan. 15 by Nathan Berman, places Metro Loft as the building’s new owner.

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A family-run concrete firm based in Tennessee has purchased an industrial site from a Long Island-based family for $60M, Crain’s New York Business reported. SRM Concrete obtained a $39M loan from BMO Bank to fund the purchase of 120-05 31st Ave. in College Point, Queens, from the Ferrara family.

SRM already operates a plant at the address and plans to continue running the plant. The deal makes SRM the latest tenant to become an owner in NYC, following a trend that started in late 2023 when several luxury fashion occupiers dropped millions of dollars to own the Manhattan real estate they operate. The trend has since spread to the city’s office market.

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Hubb NYC Properties dropped $34M to become the owner of 345 E. 64th St., a 12-story, 60-unit apartment building, in an off-market transaction, Commercial Observer reported.

The buyer intends to maintain and operate the building for the long term. The seller was the Parkoff Organization, which owns around 4,000 units across NYC and faced heat last year when the Fair Housing Justice Center sued the landlord for alleged voucher discrimination, the New York Post reported at the time.

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Blackstone is under contract to buy the Kimpton Hotel Eventi in Midtown from DLJ Real Estate Capital Partners, Bloomberg reported. The deal will cost Blackstone $175M for the 292-key hotel at 851 Sixth Ave. The sale took place as investors eye NYC hotel assets, with bookings reaching close to prepandemic levels and regulations keeping hotel construction muted and the supply of new rooms limited.

However, Kimpton Hotels & Restaurants is working with Extell Development to open the hotelier’s third NYC location, the Kimpton Rockefeller Center, later this year, Hotel Dive previously reported.

TOP LEASES

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Hartree Partners signed a 54K SF lease this week at SL Green's 1185 Sixth Ave.

Hartree Partners has signed for 54K SF at SL Green Realty’s 1185 Sixth Ave., according to a release. Hartree will occupy the 24th and 25th floors of the 42-story office tower, which is home to tenants including Hess Corp., Syska Hennessy Group and the Industrial and Commercial Bank of China.

Hartree Partners was represented by CBRE’s Ben Friedland, Munish Viralam and Gary Davies, while SL Green was represented by Newmark’s Brian Waterman, Scott Klau, Brent Ozarowski, David Waterman and Kevin Sullivan.

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Private equity firm Incline Equity Partners signed for 32K SF at HJ Kalikow & Co.’s 101 Park Ave. office tower, according to a release. The deal is an expansion for Pittsburgh-based Incline Equity Partners, which grew from the 18K SF it already occupies on the 46th floor of the 49-story tower to an additional 14K SF on the 47th floor.

HJ Kalikow has owned and operated the property, which has 1.3M SF of office space plus amenity offerings and 30K SF of retail, since it was built in 1982. JLL’s Alexander Chudnoff, Harrison Potter and Kate Roush represented the tenant, while Cushman & Wakefield’s John Cefaly and Nicholas Dysenchuk represented the landlord. 

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Flex office and conference space provider Jay Suites and Jay Conference will occupy 60K SF at GFP Real Estate’s 515 Madison Ave., according to a release. The deal is a renewal and expansion in the 42-story office property, giving Jay Suites and Jay Conference three full floors for a 12-year term. The tenant has been in the 1932-built, 370K SF building since 2019 and is in 13 locations across New York City. GFP’s Jeff Gural represented both sides.

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Oaktree Capital Management signed for 79K SF at Vornado Realty Trust’s 1290 Sixth Ave., The Real Deal reported. The investment management firm is moving from Paramount Group’s 1301 Sixth Ave. to the Vornado-owned building, which the landlord is renovating to add a curtain wall and wellness amenities.

Other tenants in the property include investment firm Neuberger Berman, which has 400K SF. The Trump Organization also has a 30% stake in the building in a deal that restricts a sale until 2044, but the building is also among the assets in Trump’s portfolio that are at risk as part of a New York state lawsuit. Asking rents for Oaktree were $98 per SF, with CBRE’s John Nugent representing the tenant. A Vornado team represented the landlord in-house.

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Ellenoff Grossman & Schole renewed its lease at Fisher Brothers’ 1345 Sixth Ave. for a further 11 years and added an extra 19K SF to its footprint in the building, Commercial Observer reported.

The deal gives the law firm a total of 60K SF in the 49-story tower, occupying the whole 11th floor as well as part of the 10th floor. Hedge fund Canyon Partners also signed an 11-year deal for 22K SF on the 28th floor of the building in what appears to be a relocation from 1370 Sixth Ave. Asking rents in the Ellenoff Grossman deal were in the high $80s per SF and in the low $100s per SF for Canyon Partners.

The deals resulted in a total of 80K SF of leases in the 1.9M SF property, which the landlord spent $120M revamping in 2021. 

Timothy Gibson, William Levitsky and John Cilmi of JLL represented the law firm, while their JLL colleagues Cynthia Wasserberger and Michael Pallas worked with Canyon Partners. CBRE’s Howard Fiddle, Peter Turchin, Gregg Rothkin, Ben Joseph, William Iacovelli and Charles Laginestra represented the landlord, with in-house help from Fisher Brothers’ Marc Packman and Clark Briffel.

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RXR and Hudson Bay Capital signed cosmetics and skin care retailer Ulta Beauty to 12K SF on the ground floor of 620 Sixth Ave., according to a release. Asking rents for the deal in the seven-story building were $175 per SF, Commercial Observer reported. The location is Ulta’s third Manhattan store. RXR had in-house representation from Daniel Birney as well as from Ripco Real Estate’s Peter Ripka, Richard Skulnik, Lindsay Zegans, Ben Sabin and Mary Schwagerl. Ulta was represented by Katz & Associates' Brian Katz.

TOP FINANCING

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The development site at 250 W. 49th St., where Chess Builders is planning a 28-story rental building, seen in September.

Local developer Chess Builders netted a $79M loan for the acquisition, construction and development of a rental building at 250 W. 49th St., according to a release. The funding came from S3 Capital and will go toward building a 28-story mixed-use rental building with 138 rental units and more than 2K SF of ground-floor retail space. The building, which is fully vested under the now-expired 421-a program, will receive a 35-year tax abatement and will also feature amenities including a golf simulator, fitness center, tenant lounge and rooftop lounge.

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GFP Real Estate scored a $288M loan from BDT & MSD Partners for an office-to-residential conversion at 222 Broadway, Commercial Observer reported. The funding will be used to turn the 770K SF office tower in Lower Manhattan into an 800-unit apartment building. GFP and its partner in the joint venture, TPG, submitted alteration applications to the NYC Department of Buildings in August after teaming up to buy the building from DWS in June. Jordan Roeschlaub and Chris Kramer of Newmark arranged the financing transaction.

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A joint venture between CB Developers and SK Development scored a $76M refi for Williamsburg’s Pod Brooklyn Hotel at 247 Metropolitan Ave., PincusCo reported. The hotel is made up of four commercial condos totaling 105K SF and 249 keys. The financing came from JPMorgan Chase and Citibank and replaces a $78.4M loan from Prime Finance.

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Benefit Street Partners has agreed to lend $120M to Stuart Podolsky, Jay Podolsky and the Chetrit Group for the Empire Hotel building at 1889 Broadway, PincusCo reported. The loan replaces a $180M sum. A special servicer alleged that the previous loan was in default and filed a preforeclosure action in 2022 but withdrew the case several months later. The 217K SF property was first built in 1901 and has 427 keys.

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The Domain Cos. scored a $218.6M financing deal for Estela, a two-building Mott Haven development at 414 and 445 Gerard Ave., according to New York YIMBY. The development has 380 market-rate units and 164 affordable units across the two 11-story towers, plus 10K SF of ground-floor retail space. Long-term permanent financing came from the Freddie Mac Forward Commitment program through JLL Real Estate Capital, with The Urban Investment Group at Goldman Sachs Alternatives leading the opportunity zone equity financing.

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Access Point Financial has agreed to lend GFI Capital Resources Group $195M to refi The Beekman, a 287-key hotel at 123 Nassau St. in Lower Manhattan, according to a release. The hotel is affiliated with the Hyatt Thompson Brand, and the city landmarked its nine-story Victorian atrium a year ago. It was named one of Fodor’s best 100 hotels globally in 2024, after a joint venture including GFI converted an empty office building into a hotel in 2014, Commercial Observer previously reported.