Last week we spoke about how many businesses don't want to own their own real estate, but that some do. We then spoke about Prada's recent acquisition of 720 and 724 Fifth Avenue for $835 million. However, they're not the only ones. According to New York's The Real Deal (thank you John Bell for the article), last year saw the following transactions:
Swiss fashion house Akris bought a property from SL Green for $40.6 million
Japanese coffee retailer Geshary bought a property on Fifth Avenue from the Riese Organization for $38 million
And Dyson bought a building in Soho for $60 million
Now, some, or a lot of this, is strategic. New York is New York, and global brands need to be there. Another part of this is that there was less competition last year. Fewer real estate companies wanted to buy retail and office buildings, and so end users seem to have stepped in at what they presumably saw as favourable prices.
But it's also not totally foreign for retailers to want to own their own real estate. Perhaps the most famous example is McDonald's, which owns its own real estate and then leases it out to franchisees. Though as I alluded to last week, it's important to know what business you're ultimately in. And McDonald's knows it's in the real estate business.
Earlier this month, Extell Development Company announced the launch of sales for its Central Park Tower – which it is calling “the definitive New York skyscraper”, as well as the tallest residential building in the world.
The project is located on Billionaire’s Row in NYC and it will be 1,550 feet tall when completed. That puts it well into supertall territory.
According to Curbed, the smallest apartments start at 1,435 sf and the largest will be an estate in the sky at around 17,500 sf.
The projected sellout for the project is, or at least was, $4 billion back in 2017. That will set all sorts of records upon completion. At the time of the above filing, the average price was pegged at $7,106 per square foot.
If you’d like to read up on the project’s capital stack, you can do that here. And for those of us who are used to having to pre-sell condos before digging, you may find it interesting to know that this project started construction in 2014.
I wonder how much a parking spot costs (assuming there is even parking).
The German investment fund Bayerische Versorgungskammer (BVK) has just closed on the Herzog & de Meuron-designed mixed-use parking garage / event space at 1111 Lincoln in Miami Beach.
They paid USD$283 million or $1,932 per square foot. It’s one of the biggest deals ever on Lincoln Road.
The complex includes 94,488 square feet of office, 51,839 square feet of retail, and a 300 stall parking garage / event space (people get married in this garage). The sale also includes retail space at 1664-1664 Lenox Avenue, but excludes two new residential units according to The Real Deal. I’m assuming it is these two.
The seller was developer Robert Wennett, who bought the site – existing office building + surface parking lot – in 2005 for $23.5 million. He then spent $65 million on the widely celebrated HdM garage and built himself a penthouse residence on top if it.
I am very curious to know the cap rate. But it would also be interesting to try and figure out what sort of premium could attributed to the fact that this is a pretty famous complex designed by HdM.
The Wall Street Journal once wrote that several hundred people walk into this parking garage every single day just to look around. I have been one of those humans on many many occasions. See above photo.
For more photos of 1111 Lincoln, click here.