Courtesy of Kohn Pedersen Fox Associates
A render of SL Green’s One Madison Avenue office project in Manhattan
SL Green secured a $ 1.25 billion construction loan to build a large office tower in Midtown South at the height of a pandemic that has fundamentally changed the outlook for Manhattan offices.
Debt, provided by Wells fargo, TD Bank, Goldman Sachs, Bank of America, German Bank and Axos Bank, will finance the construction of One Madison Avenue, the largest commercial project to start since the coronavirus pandemic took hold in the city in March, the Real Estate Investment Trust announced today. SL Green is in partnership with Hines and the National Pension Service of Korea – the same partners behind One Vanderbilt – to develop the tower.
“Our commitment and faith in New York City is unwavering,” SL Green President and CEO Marc Holliday said in a statement. “Despite the headwinds presented by current and temporary challenges, we remain focused on boosting New York City’s economy by creating thousands of construction jobs and bringing in a top-notch new office tower. at the much sought after Flatiron / Midtown South submarket. for the first time in a decade.
Construction will begin this week and is expected to be completed in 2024. The loan has an interest rate of 3.35% against Libor and could see that rate drop to 2.5% if it meets rental targets and of completion, the statement said.
“The grand opening of One Madison Avenue symbolizes confidence and optimism in the resilience of New York City as a safe and vibrant urban center,” said New York City Deputy Mayor for Housing and economic development. Vicki summer said in the press release.
The new 1.4M SF office tower redevelopment, located between East 23rd Street and East 24th Street near Madison Square Park, will include retail space, 15K SF food market, fitness center form and event space.
The construction of the redevelopment comes as the future of New York’s office market remains uncertain amid the pandemic and homework revolution. Availability is at a 16-year high and the available sublet space is set to surpass the peak of the Great Financial Crisis.
In an investment presentation in 2018, SL Green Director of Leasing Steve durels said the real estate trust expected to rent the space for $ 135 to $ 175 per square foot, similar to the rents it received for the space at A Vanderbilt.
Applying for Rents for Class A Office Space in Manhattan fell 5% year over year in the third quarter, from $ 98.33 per FS to $ 93.43. Former One Madison tenant Credit Suisse paid $ 60 per FS for its offices, according to the investment presentation. Credit Suisse Paid $ 40.9 Million To End Lease Earlier And Pave The Way For Presentation, SL Green disclosed in a regulatory dossier.