The Ten Most Expensive Buildings

040907 article koblin The Ten Most Expensive BuildingsIt’s the most lucrative era in the history of the city’s commercial real-estate market: a time when New York office buildings are selling for $1.8 billion, and a collection of high-rise rentals for more than $5 billion. Records are set frequently; new trends are set daily.

“It’s unprecedented. It’s extraordinary,” office landlord and developer Larry Silverstein told The Observer.

So where’s the next record? If every New York City office building went up for sale, which ones would sell for the highest price?

The Observer asked the denizens of the real-estate world—the people who buy the buildings and the ones who trade them— which towers they thought would close with the biggest price tags.

The following list is a compilation of this (indeed, very unscientific) survey.

Most of these buildings, if sold today, would eclipse the $1.8 billion record that 666 Fifth Avenue set when it closed in January. (The building was purchased by Kushner Companies, where Jared Kushner, the publisher of The Observer, is a principal.) Most of these buildings are near Grand Central Terminal. Others are either on or just off Fifth Avenue, and one is located downtown. According to those interviewed, Rockefeller Center would, all together, sell for more than $8 billion, and the G.M. Building by itself would clear $4 billion.

All of the owners and brokers agreed on a simple rubric to figure which buildings would go for the highest price: the total amount of office space, plus the amount of rent a building can command.

So, in no order:

GM Building

The General Motors Building, at 767 Fifth Avenue, is the most valuable building in the world. It’s across the street from the Plaza Hotel, it sits at the foot of Central Park, and it has retail space on both Fifth Avenue—the cubed Apple store—and Madison Avenue.

It’s ridiculously huge, at 1.9 million square feet, and charges mind-blowing rents. Every person interviewed for this story was asked to give a short list of his favorite buildings in the city. The G.M. Building made every list. If it ever went on the market, it would set the all-time record for a single building.

“G.M. is worth $4 billion–plus,” said Scott Latham of the brokerage Cushman & Wakefield. It belongs to the father-and-son team of Harry and Billy Macklowe, who purchased it for $1.4 billion in 2003. It’s worth nearly three times that now.

200 Park Avenue

Sure, the MetLife Building, at 200 Park Avenue, dwarfs Grand Central. And sure, New Yorkers reserve a certain antipathy for the building. But, to real-estate insiders, its heft is its prize.

“I don’t think there’s any building you see more readily in the city than 200 Park,” said Woody Heller, a broker at the brokerage Studley.

“It’s hard to find a better location,” Mr. Silverstein added.

The building, which used to be known as the Pan Am Building, also has everything that might tickle a leasing broker: It’s huge, it has fantastic views, it’s literally connected to Grand Central, and it commands huge rents. It sold in 2005 for a then-record $1.72 billion—but if the current landlord, Tishman Speyer, decided to sell today, it could double that price.

Rockefeller Center

If Tishman Speyer ever sold Rockefeller Center and its collection of 12 buildings, which make up more than six million square feet, it would easily smash Stuyvesant Town and Peter Cooper Village’s $5.4 billion record-breaking sale. One broker estimated that it would go for about $1,400 per square foot—bringing the entire complex in at more than $8 billion.

“Buildings like this are art,” said Joseph Moinian, the developer.

It’s a complex that Jerry Speyer purchased in 1996 for $1.85 billion. Mr. Speyer, who also owns 200 Park Avenue, the Chrysler Building, 229 West 43rd Street and Stuyvesant Town–Peter Cooper Village, has assembled more trophy properties than any other developer around. “They are the greatest landlord in the city,” Mr. Latham said.

9 West 57th Street

The sloping-glass façade that makes up 9 West 57th Street is a signature touch to a signature tower in Manhattan. The building charges jaw-dropping rents, and its views are unmatched. “It’s like you’re sitting out in the park; it’s your backyard,” said Douglas Durst, the landlord and developer. “It’s an incredible location.”

“I think its views are wonderful,” said Mr. Silverstein. “The flow of the building as it arches upward is quite beautiful.”

The Sheldon Solow–owned building was designed by Skidmore, Owings & Merrill, and includes public art outside and some of the city’s highest rents on the inside. When an elevator carries you up in the building, it opens to floor-to-ceiling windows with sweeping views of Central Park. Asking rents on the top floors stand at nearly $200 per square foot.

245 Park Avenue

The tower at 245 Park Avenue sits directly next to Grand Central. More importantly, it has 1.6 million square feet and takes up the entire block between 46th and 47th streets. That means a lot of space in an area where buildings sell for a very high price.

“It’s literally at the northern entrance of Grand Central, and it just has a special value,” said Jon Caplan, a sales broker at Cushman & Wakefield.

High-profile tenants include the headquarters for Major League Baseball, which takes up more than 130,000 square feet. “It’s a great, great building,” Mr. Moinian said. “I love that building—it’s one of the best in the city.”

277 Park Avenue

In the 1960’s, when tall towers went up all around Grand Central, they created a master plan that actually worked. Within a few blocks of the historic train station, billions of dollars could be traded in real estate alone. It is, without a doubt, the most powerful stretch of commercial real estate in the city.

Right next to 245 Park Avenue, the 51-story, 1.7-million-square-foot 277 Park Avenue would easily eclipse $2 billion if it traded today. The building is home to J.P. Morgan. “It’s a fabulous location,” said Bob Alexander, a broker at brokerage CB Richard Ellis. “All in all, how can you beat that location?”

7 World Trade Center

The finishing touches are still being applied to 7 World Trade Center, but when it’s all done, it will become downtown’s most valuable building.

“What makes it special is that it’s an exquisitely designed building,” said Mr. Silverstein, its developer.

But what makes it so valuable are its size and amenities: It’s 1.8 million square feet, and it’s brand-new. It embraces public art—there’s a Jeff Koons sculpture outside—and it’s attractive to deep-pocketed tenants. Moody’s Investors Service has signed a lease for more than 500,000 square feet in the building.

“It pushes the envelope for downtown,” said Mr. Latham of Cushman & Wakefield. “It’s arguably the best building in the city right now.”

One Bryant Park

The Bank of America Tower at 42nd Street, between Fifth and Sixth avenues, is still a skeletal structure. But by the time it opens next year, the 54-story glass tower will be one of the city’s elite skyscrapers.

“It’s in the best location in the city,” said its developer, Mr. Durst. “It’s a large building, it’s a new building, and it will have the most advanced technology in it.”

It will also be able to capitalize on something that will take years for other owners to do: bring in all of its tenants at market rates. That means Mr. Durst will be collecting a lot of $100-a-foot rent checks. The building is over two million square feet, and its value will easily be more than $3 billion by the time it opens.

4 Times Square

When the Condé Nast Building was finished in 1999, it officially turned Times Square into an expansive playpen for developers. “Nobody believed we would find tenants,” said Mr. Durst, its developer. Then the law firm Skadden, Arps, Slate, Meagher & Flom signed on. So did Condé Nast publications; Frank Gehry designed the cafeteria on the fourth floor of the building.

“When Skadden decided to go there,” said Mr. Durst, “it changed the perception of Times Square.” Suddenly, what had once been New York’s most public blight became a vital link in the increasingly expensive midtown market.

The Seagram Building

It’s New York’s most prized trophy: the Philip Johnson–and–Mies van der Rohe–designed Park Avenue classic, the Seagram Building. “It’s such a beautiful building,” Mr. Durst said, “and those rents that people are willing to pay to go there!”

The RFR-owned building impresses landlords in two ways: It’s absolutely the hallmark to any portfolio, and it’s a huge moneymaker, with eager tenants dropping well over $100 per square foot.

“It’s the best building in the city,” Mr. Moinian said.

It’s a bit less than 800,000 square feet, so the Seagram is the only building on the list that wouldn’t clear $2 billion. It is a building, however, that would probably clear $2,000 per square foot.

“I think it falls into a group, a handful of buildings that would set new per-square-foot pricing records,” said Mr. Caplan of Cushman & Wakefield.

Where’s the Empire State Building?

Rents matter more than legend to those who buy and trade New York’s concrete canyons

Hey, what about those other icons piercing the sky? Why didn’t the Empire State Building or the Chrysler Building—or even the Woolworth Building—make the list of New York’s priciest?

Well, real-estate people aren’t aesthetes.

Something that New Yorkers regard as an engineering disaster—the MetLife Building girdling Grand Central Terminal, for instance—can be, for real-estate people, the gold standard for office towers. Why? A building like MetLife was designed specifically with bloated rent checks in mind, while the Woolworth Building’s tiny floor plates certainly were not. And higher rents mean higher sales prices.

The Empire State Building has its own issues, like a decades-long battle to attract tenants. It’s been the butt of jokes among real-estate brokers. (The Empty State Building! Ha!)

The building, owned by a partnership between Peter Malkin and Leona Helmsley, is undergoing an extensive makeover. And it’s still the city’s trademark skyscraper. Considering its size—2.77 million square feet—it could crack the $2 billion sales barrier soon. Still, a lot of that depends on what it looks like post-renovation.

The only part of the Chrysler Building that would go up for sale, meanwhile, is the leasehold position. Tishman Speyer is the current leaseholder, which means managing the building and collecting the rent checks. Since a leasehold position doesn’t mean total ownership, it generally doesn’t bring in the billions and billions of dollars being traded.

Cooper Union controls the ground that the Chrysler Building was built on; if the school waited for Tishman Speyer’s lease to run out and then decided to sell the building, it would be a top sale.