New York’s Chrysler Building hits the market

The Chrysler Building in Midtown Manhattan. Picture: AFP

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 to market the property, according to Darcy Stacom, chairman of the firm’s New York City capital markets group.

In recent years, US and overseas investors have splurged on famous properties such as the Willis Tower in Chicago and New York’s Waldorf Astoria Hotel, for which a Chinese insurer paid $US1.95 billion in 2015 — a record for a US hotel sale.

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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 $US800 million that the Abu Dhabi Investment Council paid for a 90 per cent stake in the property in 2008, shortly before the global financial crisis caused 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-old building, and the escalating fees for leasing the ground beneath it, could also weigh on the sales price.

Chrysler Building New York

The Chrysler Building. Picture: AP

“There might be a billionaire who comes along and says, ‘I want to tell the world I own the Chrysler Building’,” says Adelaide Polsinelli, vice-chair of the commercial investment sales and leasing division at real estate services firm Compass. But, she adds, there are downsides to owning a pre-war 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.”

Designed by William Van Alen, the 77-storey skyscraper was built between 1928 and 1930 amid a spirited contest to become the world’s tallest building. It 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 Chrysler until 1953, and continued to hold its place in popular culture, featuring in numerous movies from Independence Day to Spider-Man and Men in Black 3. Lego offers a Chrysler Building set.

Tishman Speyer initially spent $US100 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.

The 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 $US7.75 million in rent during 2017, but that annual lease fee jumped to $US32.5 million ($45.2\ million) last year. It rises to $US41 million in 2028, and there other associated fees along with the lease, Cooper Union financial documents show.

Still, 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 $US2.4 billion for a former warehouse building, known as Chelsea Market, that dates back to the 19th century.

This article originally appeared on www.theaustralian.com.au/property.