The publishing company Hearst is gobbling up property south of Columbus Circle with all the gluttonous verve of a real estate tycoon.
In another blockbuster deal, the Hearst Corporation has purchased the commercial portion of The Sheffield, a 41-story residential tower next door to its headquarters, for $95 million. The deal will close this week, said Kent Swig, the owner of The Sheffield at 322 West 57th Street.
Hearst will become the landlord of 109,000 square feet of office space, a spokeswoman for Hearst confirmed.
The Sheffield is literally next-door to Hearst’s new 46-story skyscraper, giving the impression that the publisher is on the brink of creating a Columbus Circle-area campus for its national publications, such as Esquire, O, Cosmopolitan and Harper’s Bazaar.
The buy is just the latest real estate deal in midtown for Hearst. Last year, it opened a $500 million skyscraper above its historic headquarters on Eighth Avenue; earlier this year, it sold a $160 million development site to Mort Zuckerman; in the past three months, as The Observer reported last week, it has purchased $29 million worth of midtown apartment buildings around the corner from its tower.
Mr. Swig said he originally approached Hearst’s real estate brokers, the CB Richard Ellis team of Darcy Stacom and Bill Shanahan, to see if Hearst had interest in the space. They jumped at it.
“We put this out as a package to them,” he said. “They wanted everything, which evidences their interest in maintaining the quality and integrity and security of the block. They wanted all of it.”
And that’s what they got. Mr. Swig said Hearst will control floors two through six and part of the seventh, and will take control of the retail portion of the building (a Starbucks and a vacant space on 57th Street) and a parking garage between both buildings.
Now the question: why are they buying?
The Sheffield’s office space currently has nine tenants, according to a sign in the building’s lobby, with leases beginning to roll over in three years. Amy Davidson, the spokeswoman for Hearst, said the buy was “for future growth.”
She wouldn’t quite say that Hearst was out of space at its new 850,000-square-foot tower, which opened only last year, but she wrote in an e-mail that “there is no significant unused office space at the Tower.”
It’s one thing if Hearst needs extra office space, but it’s a bit of a mystery as to why it has been purchasing four-story apartment buildings in the area. Mr. Swig said it was an investment.
“I would assume when they spent time and money to create a world-class headquarters like they did that they would be interested to own more of the block to maintain the safety and integrity and quality of the area,” he said.
Hmm … but an investment of what exactly? Another development site?
In any event, for Mr. Swig, the deal is a welcome bit of good news at The Sheffield, which has been surrounded with a cloud of controversy since he bought it.