Chrysler Building, famed on Manhattan skyline, on block
Faced with high costs and stiff competition, owners have hired CBRE to market tower
New York City’s iconic Chrysler Building is up for sale.
The owners of the 1930 art deco office tower—an Abu Dhabi government fund and New York developer Tishman Speyer— have hired CBRE Group Inc. to market the property, according to Darcy Stacom, chairman of the firm’s New York City capital markets group.
In recent years, U.S. and overseas investors have splurged on famous properties like the Willis Tower in Chicago and New York’s Waldorf Astoria Hotel, for which a Chinese insurer paid $1.95 billion (U.S.) in 2015—a record for a U.S. hotel sale. The Chrysler Building’s owners are hoping to attract deep-pocketed suitors from across the globe, offering them the opportunity to own a famous slice of Manhattan skyline and a piece of New York City history.
Estimates for the property’s value vary widely. But a number of real-estate investors believe the Chrysler Building could struggle to recoup the $800 million that the Abu Dhabi Investment Council paid for a 90% stake in the property in 2008, shortly before the financial crisis caused real-estate prices to plummet.
The landmark building on Manhattan’s East Side is competing for tenants with gleaming new office towers designed specifically for current tastes, many boasting floor-to-ceiling windows and modern amenities like sweeping outdoor terraces, bike storage and state-of-the art fitness centres.
The costs of improvements and upkeep for the nearly 90-year building, and the escalating fees for leasing the ground beneath
the building, could also weigh on the sales price.
“There might be a billionaire who comes along and says, ‘I want to tell the world I own the Chrysler Building,’” said Adelaide Polsinelli, vice chair of the commercial investment sales and leasing division at real-estate services firm Compass.
But, she added, there are downsides to owning a prewar building. “When things break, it takes much longer to fix because there’s only one guy on the planet that has the tools to fix something from the 1920s and 1940s,” she said.
Designed by William Van Alen, the 77-story skyscraper was built between 1928 and 1930 amid a spirited contest to become the world’s tallest building. Chrysler
Corp. founder Walter P. Chrysler took over the project from the developer.
Mr. Chrysler and Mr. Van Alen were racing against the Bank of Manhattan, rising at 40 Wall Street, to become the world’s tallest structure. The Chrysler Building’s 185-foot spire, secretly built and then assembled on the 65th floor, would vault the tower ahead of its downtown competitor. In 1929, a 20-ton derrick raised and riveted the sphere into place in only 90 minutes, an engineering feat for the time.
The Chrysler Building held the world’s-tallest title for only a short time before it was surpassed by the Empire State Building, which was completed in 1931. It served as the headquarters for the Chrysler Corp. until 1953, and
continued to hold its place in popular culture, featured in numerous movies from “Independence Day” to “Spider-Man” and “Men in Black 3.” Lego offers a Chrysler Building set.
The building’s owners are looking to sell as the Manhattan office property market has cooled from its 2016 peak.
Sale prices took a hit in 2017, when Chinese investors pulled back. But activity began to pick up again last year. Stock market turmoil could lead some investors to seek the security of bricksand-mortar in big cities, said Jim Costello, a senior vice president with Real Capital Analytics.
“In Manhattan you know what you’re getting, and there’s a certain amount of safety,” he said.
Tishman Speyer initially spent $100 million in improvements when it took over the tower and two other properties in 1997. The partnership with Abu Dhabi has spent additional funds to maintain the building and attract new tenants, such as Creative Arts Agency and co-working firm Spaces.
A new owner may have to spend even more to make the property attractive to new companies looking to hire young employees, office-building owners say.
Some cite longtime rival the Empire State Building as an example. In 2006, Empire State Realty Trust launched a $550 million modernization that included new mechanical systems, updated elevators and a lobby restoration. The owner also added amenities like a restaurant with private executive dining, a new antenna system for wireless reception and a tenant-only fitness centre. LinkedIn Corp., Expedia Group Inc. and Shutterstock Inc. are recent tenants.
The Chrysler Building also faces rising costs associated with a ground lease. The land beneath the building is owned by the Cooper Union school. The building’s owners paid the school $7.75 million in rent during 2017, but that annual lease fee jumped to $32.5 million last year. It rises to $41 million in 2028, and there other associated fees along with the lease, according to Cooper Union’s financial documents.
Sill, some property investors say 1930s-era buildings hold a certain appeal, with their distinct architecture and sturdy floor plans. Some tech companies even welcome vintage properties. Google last year paid $2.4 billion for a former warehouse building, known as Chelsea Market, that dates back to the 19th century.