Fifth Avenue building set to test market for older NYC towers

A 1920s-era office tower on Fifth Avenue is testing the market for older buildings at a time when tenants have gravitated to Manhattan's new skyscrapers.

The 24-storey property, at 475 Fifth Avenue, is expected to fetch roughly US$300 million, according to Darcy Stacom, a broker at CBRE Group, which is handling the sale.

The property, which was built in 1925, is owned by Nuveen Real Estate, which spent US$62 million on a renovation that was completed in 2015.

Older office buildings have struggled to draw tenants amid competition from the gleaming glass towers that have sprouted at Hudson Yards and elsewhere around Midtown.

But the renovated property, which faces the New York Public Library, should draw investor interest because of its proximity to Grand Central Terminal, according to Stacom.

"We're bringing it up for sale now because the market around Grand Central has become so strong," Stacom said.

"With millennials having moved to suburbs, you need to be urban, on a transit hub. There're too many commuting long distances now and they just don't want to commute further."

The tenants at the building include publisher Penske Media and investment adviser Kylin Management.

Amazon.com is also renovating the nearby Lord & Taylor building that it bought last year to house office workers.

At Olympic Tower, 645 Fifth Avenue, landlord Oxford Properties Group also spent more than US$30 million on renovations.

The pandemic has been hard on Manhattan's office market.

As more companies embrace hybrid work schedules, some are re-evaluating how much space they need in Manhattan.

Still, there are signs of growing appetite for offices close to transit hubs.

One Vanderbilt, the 1,401-foot skyscraper that opened in the heart of the pandemic, is more than 90 per cent leased. BLOOMBERG