NYC’s Third Avenue Transformed by Major Commercial Investors

A Resurgence of Interest

Third Avenue was never a first for tenants. But as Class A office towers along Fifth, Sixth, Madison, and Park avenues lease to capacity, Third is becoming a respectable finish.

“All of a sudden there’s a new focus on Third Avenue, not only by the owners, but by the tenancy,” said Dan Shannon, an architect who heads MdeAS. “We studied one for a conversion to residential that looked very good and during that study it started leasing again as a commercial office building.”

New Office Spaces and Rentals

And while companies heading east may sacrifice location, they’re getting lower rents and higher floors with better views in return. “The fact is, all the buildings on Park and Madison that are often more desirable are not only seeing rents that are higher, but availabilities are mostly only on the lower floors,” said Adam Henick of Current Real Estate Advisors.

Several Third Avenue towers have prebuilt offices ready to rent as small as 2,000 square feet, as well as multi-floor blocks from 60,000 square feet upwards to 200,000 or even 500,000 square feet.

Right-Sized for Tenant Needs

In fact, aside from two larger office buildings — Vornado’s No. 909, with 1.34 million square feet and floorplates of about 34,000 square feet; and SL Green’s No. 919, with 1.5 million square feet — Shannon says the rest are “right-sized” for accounting, law firm, and healthcare office use with 500,000 to 800,000 square feet.

Renovations and Upgrades

Adding to the desirability, a number of renovations have recently completed or gotten underway on the avenue: at BentallGreenOak’s No. 685; SL Green’s Lipstick Building at No. 885; Sage Realty’s No. 777; and Waterman Interests and HPS Investment Partners’ $60 million overhaul of No. 850.

Durst’s Renovations

The Durst organization also owns a number of Third Avenue towers. It has infused $150 million into No. 825 by adding Dynamic View windows that automatically adjust to the sunlight, new building infrastructure, and retail storefronts along with a new lobby and hospitality-focused building amenity with a wraparound outdoor terrace on the 12th floor.

Durst also owns and has renovated No. 675, which has a zinc green wall, as well as Nos. 733 and 655, both of which have green roofs and exclusive tenant terraces.

Nuveen’s Renovation

Nuveen, which is the investment arm of TIAA, spent $40 million to renovate and rebrand the Skidmore, Owings & Merrill-designed No. 780 to the “Gardens of 780.” It sold in July for $177 million or $350 per foot to Cyrus and Darius Sakhai’s Sovereign Partners.

The “Gardens of 780”

Skidmore, Owings & Merrill’s rebranded “Gardens of 780” sold in July for $177 million. It has a distinctive Scandinavian red granite façade and a plant-filled lobby along with a wellness center, a 154-seat theater, and a conference center. Now, the website brags of future amenities including a golf simulator, a pickleball court, a sauna, and a cold plunge pool. Spaces in the 50-story tower range from just 1,973 square feet to around 11,000 square feet.

“The market is realizing the benefits of all the monies invested in the asset and the unique nature of its column-free floorplates,” said leasing agent Paul Amrich of CBRE. Asking rents there range from $68 to $90 per foot.

Residential Conversions

Love working on Third Avenue so much you never want to leave? Good deal. A handful of buildings are also being converted for resi use. The owners of 830 Third have pulled 130,000 square feet off the market to create 188 residential apartments. Quantum has teamed up with Metro Loft Management to convert No. 767, which it bought from Sage; Rudin is eyeing a conversion for No. 845; while SL Green is expecting to spend $805 million on No. 750 to convert it into 639 apartments.

Conclusion

Third Avenue is undergoing a transformation, and it’s gaining popularity among office tenants and developers alike. With its unique floorplates, beautiful views, and renovated spaces, it’s no wonder that this once-overlooked avenue is becoming a hot spot for business.

FAQs

Q: What’s driving the interest in Third Avenue office space?
A: The scarcity of available space in more popular areas like Park and Madison, combined with lower rents and unique floorplates.

Q: Are there any large office buildings on Third Avenue?
A: Yes, Vornado’s No. 909 has 1.34 million square feet, and SL Green’s No. 919 has 1.5 million square feet.

Q: Are there any residential conversions on Third Avenue?
A: Yes, several buildings are being converted for residential use, including the owners of 830 Third, Quantum, Rudin, and SL Green.