GM Building: The Most Expensive Office Space in NYC
Two investment funds owning 40 percent of the famed General Motors Building in New York City have sold their stake to new buyers in a sale that marks a steep increase in value since the last time it was purchased. Buyers include Zhang Xin, a prominent Chinese real estate developer, as well as Brazil’s Safra, who have spent a combined $1.4 billion in acquiring their stake in the building.
Amid rising property values in many urban areas in the U.S., this sale represents a total valuation of around $3.4 billion, up 20 percent from the last sale 5 years ago. Property values have increased 32 percent last year in San Fransisco alone; the sale could represent continued momentum in property values across the country, as house flipping and real estate investing continue to gather strength. New York has not really seen the intense increases in property values other areas have, showing only moderate growth previously.
The majority owner of the GM Building will remain Boston Properties (NYSE:BXP), which purchased its share five years ago from the Macklowe family. The deal was then led by Mortimer B. Zuckerman, Boston Properties’ Chief Executive, who, along with partners Goldman Sachs (NYSE:GS), Qatar, and Kuwait, paid $2.9 billion for their share. At the time, this represented the highest value ever paid for an American office tower.
Xin and the Safra family are not expected to be activists in their role as shareholders, according to Darcy A. Stacom, a vice chairman of CBRE group who helped handle the transaction. Instead, she says, they are pleased with the way Boston Properties has been managing the plot.
The building, where construction was finished in 1968, originally housed a General Motors (NYSE:GM) showroom in its street-level lobby. It is currently famous for several of its prominent ground floor outfits, with legendary toy store F.A.O. Schwartz as well as Apple’s (NASDAQ:AAPL) flagship store being present there. Other tenants include Estée Lauder (NYSE:EL), Icahn Enterprises, and the law firm Weil, Gotshal and Manges.
The GM Building appears to affect the value of properties near it as well, with a plot across the street being sold for $1.3 billion to Crown Acquisitions and Highgate Holdings, a sale representing the largest purchase of an entire building in the U.S. since 2010.
Spokespeople from Boston Properties, Soho China Ltd., Xin’s Chinese development company, as well as the Safra family have not yet issued a comment on the sale.
Stacom was involved in the 2008 sale to Boston Properties as well, when the troubled New York Macklowe family was forced to sell it to pay off massive debts occurred in the real estate game. Stacom notes that the GM Building “has always been pursued,” and that “people understand its inherent value.”
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