The Citigroup building in Tribeca is expected to go to contract for about $1.6 billion, a deal that would make it the fourth-largest building sale in U.S. history, according to a source with knowledge of the deal.
A contract had not been signed as of The Observer’s deadline on Tuesday, but negotiations with two finalists had reached the final stage and it looked like the contract would be in record territory, if short of the record breaker that Citigroup and brokers had hoped it might be.
When Citigroup put the 2.6 million-square-foot building at 388-390 Greenwich Street on the market in September, it had hoped to achieve $700 per square foot, a total price that would have been higher than the record $1.8 billion that Kushner Companies paid for 666 Fifth Avenue in January. (Jared Kushner, a principal at Kushner Companies, is The Observer’s publisher.)
But in the months since the credit crunch, buyers who were so active in the spring have started to disappear. The source said that the contract price would be short of its goal because this deal was a sale leaseback, which means that Citigroup will maintain space in the building at slightly lower rents. (That’s a less attractive prospect to landlords who want to hike rents and lease to elite tenants like law firms and hedge funds.)
When the 388-390 Greenwich deal goes to contract, it’ll be just another eye-opening deal in what has been the greatest 12-month investment-sales run in Manhattan history. Some records in the past year: Stuyvesant Town and Peter Cooper Village closed in December at $5.4 billion, the biggest real estate deal in modern history; 666 Fifth closed in January at $1.8 billion; 825 Eighth Avenue closed at $1.73 billion, the second-largest building sale ever; 450 Park Avenue closed at over $1,500 per square foot, another record.
“Any billion-dollar building sale is a shot of adrenaline for the market,” said Dan Fasulo, a market analyst from research firm Real Capital Analytics.
“It’s probably not as much as they would have squeaked out six months ago,” he continued, “but the pricing is still very aggressive.”
The 388-390 Greenwich deal means that three of the four top building sales were all brokered by the same group: the Cushman & Wakefield investment team of Scott Latham, Richard Baxter, Jon Caplan and Ron Cohen. They would not comment for this story.
There’s still one other potential billion-dollar building sale on the market, too: 1177 Avenue of the Americas, which the Paramount Group has put up for sale.