Jun 8 2019

Deal in works for new Park Avenue tower

Daniel Geiger

Another new office building that would take advantage of the rezoning of Midtown East is in the planning stages on Park Avenue.

GDS Development, a builder with several commercial projects underway in the city, is negotiating to purchase an over 100-year old residential co-op building at 417 Park Ave. on the corner of East 55th Street for around $200 million, several sources with knowledge of the deal said.

If completed, the firm could erect a nearly 220,000 square foot boutique office building on the site under the rezoning plan, or an even larger structure if it is able to purchase neighboring properties to enlarge its footprint.

The brokerage and real estate services firm CBRE has been marketing 417 Park Ave. on behalf of the co-op’s residents for several months. The proceeds from the sale would be split between the 28-unit building’s shareholders, averaging over $7 million per apartment at a time when high-priced sales have dramatically slowed.

The deal would be one of several office projects spurred by the Midtown East rezoning.

JP Morgan Chase announced last year that it would utilize the plan to tear down its headquarters at 270 Park Ave. and rebuild a much larger, state of the art office tower in its place. Developer Harry Macklowe has announced plans to raise a 1,551 foot tall spire across the street from St. Patrick’s Cathedral, in part using air rights he would procure through the rezoning to give him the necessary bulk to raise such a tall building.

SL Green is in the process of building One Vanderbilt, a 1,400 foot tall office building that took advantage of a rezoning of Vanderbilt Avenue, which was passed as a precursor to the wider East Midtown plan.

The owners of 405 Park Ave., which is separated from 417 Park Ave. by a small townhouse, are using the rezoning to add four new floors on top of the existing 17-story office building.

The market for newly built office space in what is considered one of the most prestigious corridors in Midtown has been brisk. Across the street from 417 Park Ave., a new tower that is under construction at 425 Park Ave., recently struck a deal to have its anchor tenant, the hedge fund Citadel, expand by more than 50% to over 300,000 square feet. The financial firm Sentinel Capital Partners meanwhile just signed a high priced deal at One Vanderbilt.

GDS Development did not immediately comment.