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One of New York City's most successful office developments of the last few years may be headed for a sale as owner Vornado Realty Trust looks to raise cash.
The Farley Building, which Vornado and Related Cos. redeveloped from a former U.S. Post Office, was leased to Meta Platforms, Facebook's parent company, in 2020 in a 730K SF, 15-year deal that was a bright light for the market during the worst of the pandemic.
Since then, the outlook for office landlords like Vornado has become increasingly gloomy. The Manhattan-based REIT has sold several properties it considers "non-core" to raise funds, but it now is reportedly turning its attention to one of its core holdings.
Vornado has tapped Newmark Group's co-heads of U.S. capital markets, Adam Spies and Douglas Harmon, to explore sale offers for the property, Bloomberg reported, citing unnamed sources. The company could decide not to sell the building.
“It has no mortgage. It has some basis. It has no financing on it,” Vornado CEO Steven Roth said on the company earning call earlier this month. “So obviously, it's a great asset and could be an important source of liquidity.”
When he was asked by an analyst about whether the firm was contemplating a sale or a joint venture, Roth responded by saying that “we like the assets just as much as you” and that he would not comment further. Related owns 5% of the equity in the development, while Vornado owns a 95% stake.
Vornado had been planning to build about 18M SF across as many as 10 new mixed-use buildings in the area — Farley sits across Eighth Avenue from Penn Station — but in February put those plans on hold, blaming economic conditions.
If a sale were to take place, it would be a significant jolt to the city’s investment sales market. In the second quarter, there were just seven office buildings sold, according to Avison Young data, for a total of $403.1M, a 44% decrease from the trailing four-quarter average. A Farley sale would easily eclipse last quarter's total dollar volume.
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