Midtown South Office Building Sold at a Discount
Lower Price Reflects Post-Pandemic Market Changes
A Midtown South boutique office building has been purchased by Williams Equities for just $147.5 million, a significant reduction from its previous sale price of $245 million in 2018. The 300,000 square-foot property, located at 470 Park Avenue South, was sold by SJP Properties and PGIM Real Estate, a Prudential Financial affiliate.
New Era of Bargain-Basement Deals?
While the sale of 470 Park Avenue South might seem like a prime example of the current market’s trend of bargain-basement deals, experts say it’s not that simple. "We’re now in a post-pandemic interest rate and cap rate environment, very different from what existed in 2019 and for 10 or 20 years prior," said Michael Cohen, a Williams principal.
Financing the Acquisition
Williams Equities financed the acquisition with a new mortgage loan, but Cohen was unable to share details about the loan pending lender approval. The company did, however, note that the property has a $56 million mortgage from MetLife Real Estate Lending.
Investment Strategy
Williams Equities’ purchase of 470 Park Avenue South fits into its "sweet spot" of architecturally distinguished, older buildings. The company has a history of revitalizing properties in its Midtown South portfolio, including 136 Madison Avenue, where it recently completed 57,000 square feet of leasing, and 28 and 40 West 23rd Street.
Capital Improvements Program
The company plans to launch a major capital improvements program at the West 23rd Street sites, including an updated atrium and skylights and a building-wide roof deck atop No. 28.
Conclusion
The sale of 470 Park Avenue South is a prime example of the post-pandemic market’s impact on commercial real estate values. While the price may seem low compared to its previous sale price, the transaction reflects a new era of interest rates and cap rates that are driving down values. Williams Equities’ purchase of the property is a strategic move that fits into its investment strategy of revitalizing architecturally distinguished, older buildings in Midtown South.
FAQs
Q: Why did Williams Equities purchase 470 Park Avenue South at a lower price than its previous sale price in 2018?
A: The company believes the post-pandemic interest rate and cap rate environment is a major factor, resulting in significant adjustments to property values.
Q: What is the plan for the property?
A: Williams Equities plans to launch a major capital improvements program, including an updated atrium and skylights and a building-wide roof deck.
Q: How does the sale fit into Williams Equities’ investment strategy?
A: The purchase of 470 Park Avenue South fits into the company’s "sweet spot" of architecturally distinguished, older buildings in Midtown South.
