Volume 22, Number 33 | The Newspaper of Lower Manhattan | December 25 - 31, 2009
By Patrick Hedlund
JP sells low
JPMorgan Chase and Co. has agreed to sell a Financial District high-rise for less than $100 a square foot, or about a quarter of what it would have commanded during the height of the real estate boom, according to reports.
The investment/commercial bank recently sold its 23-story building at Broad and Water Sts., called Four New York Plaza, to a joint venture of real estate investment firm Harbor Group International and Lower Manhattan landlord Capstone Equities.
The price of the 1.1 million-square-foot skyscraper — which is more than half leased to JPMorgan — was reportedly in the $105 to $109 million range, or less than $100 per square foot. Insurance giant A.I.G. sold its Lower Manhattan headquarters earlier this year for a similar price, although that property was mostly vacant.
Four New York Plaza is one of about two-dozen offices that JPMorgan put on the selling block earlier this year. The bank inherited significant real estate holdings when it acquired Bear Stearns and Washington Mutual during the financial meltdown. After the Bear deal, JP backed out of plans to move into the World Trade Center Tower 5 site.
Average asking rents for Downtown’s highest-quality office buildings tumbled by more than 20 percent during the past six months, falling below $50 per square foot for the first time in years.
According to a report from real estate firm Jones Lang LaSalle, the average price per square foot of Lower Manhattan’s trophy buildings dropped from $60.23 in the spring to $47.16 in the fall — a 21.7 percent dip for the six-month period. Prices for the market’s top-flight properties had come in at $64.54 in fall 2008, marking a nearly 27 percent change year over year.
“Vacancy rates for Downtown New York trophy-class properties have remained around 9 percent over the past few months,” said James Delmonte, vice president and director of research for J.L.L.’s New York office, in a statement. “It is likely that availability will spike over the next several years, as several large institutions have yet to finalize occupancy plans. Depending on what decisions are made, vacancy rates in Lower Manhattan could potentially rise above 20 percent by 2014.”
Lower Manhattan’s Class A buildings suffered less severe decreases, slipping from $47.36 per square foot to $41 since the spring — a 13.4 percent drop-off. Year over year, Class A properties have fallen by 24 percent, settling at $41 per square foot from $53.95 in fall 2008.
The average price per square foot of all Downtown building types, including Class B and C buildings, was $38.59 — a 9.6 percent reduction since the spring and a 20.8 percent decrease year over year.
By comparison, all building types in Midtown averaged $59.92 per square foot, with trophy properties sitting at $73.58. The Midtown trophy market took the biggest hit of any year over year, slipping by 37.4 percent since fall 2008.
Congressmember Jerrold Nadler has secured millions in federal funding for his Downtown district, including $150,000 for Urban Assembly New York Harbor High School to construct a Maritime and Science Technology and Training Center on Governors Island. The high school plans to move to the island in 2010.