Abu Dhabi 'taking a hit' on iconic Chrysler selloff
The building’s owners, the Abu Dhabi Investment Council and New York developer Tishman Speyer, have hired commercial real estate firm CBRE Group Inc. to market the landmark Art Deco skyscraper, spokespeople confirmed this week.
Mermelstein, the managing director of One & Only Holdings, which helps foreign billionaires buy US property, said the sovereign wealth fund would struggle to recoup the $800 million it paid for its 90 percent stake in the tower a decade ago.
“It’s important to realise that there is substantial new construction in the city during a fairly soft market and we’re seeing properties trading at fairly low numbers compared to what they were trading at a few years ago,” Mermelstein told TNA.
“Depending on how badly Abu Dhabi needs this money, they may want to reconsider the timing.”
Emirati investors purchased the skyscraper when oil prices were soaring and the US property sector remained buoyant, but both markets were soon feeling the impact of a global economic crash.
CBRE has not revealed the building’s asking price however, estimates start as low as $400 million.
“Based on some of the other assets that have traded in the area, it’s going to go below the $800 million,” said Mermelstein.
“There are players who will pay a significant premium for trophy assets like this. But economic conditions are not in Abu Dhabi’s favour today, so I don’t anticipate there will be trophy buyers coming forward like they did three or four years ago.”
While the nearly 90-year-old Chrysler Building is a much-loved Manhattan landmark, it is competing for tenants with new skyscrapers that boast sweeping outdoor terraces, large floor plates and modern amenities.
The building’s brand and its location on the corner of 42nd Street and Lexington Avenue just east of Grand Central Terminal, a major transportation hub, make it an attractive trophy asset in the midtown district.
But its occupancy rate of about 80 percent is lower than average. Many midtown storefronts are empty these days, with e-commerce hitting retailers hard. New building stock in Long Island City and the new Hudson Yards district are attractive alternatives.
The site has also seen hikes in land rents, and faces another in 2028.
“The deal faces a range of challenges and the building is not likely to sell for the 2008 price. I would put it more in the range of $500 to $800 million,” Adelaide Polsinelli, a vice chair at Compass, a New York property firm, told TNA.
“It’s an older building competing with newer building stock. The ground rent was $8 million in 2008 and today it is more than $34 million.”
Designed by William van Allen, the tower became the world’s tallest building on completion in 1930 thanks to the covert addition of a 56m spire during the final stages of construction. The Empire State Building claimed the title in 1931.
Residents laud the 77-story skyscraper’s decorative cladding and curvaceous crown in a metropolis dominated by right-angled towers. The svelte masterpiece is composed of 3,826,000 bricks, 20,961 tonnes of structured steel and 391,881 rivets.
Originally the headquarters of the Chrysler Corp, the tower with its distinctive tiered crown has long been a favorite with architecture critics and the public, as well as making cameos in films, television shows and comic books.
In the movie Spider-Man, the superhero perched atop a Chrysler Building gargoyle. The edifice was pounded by meteors in Armageddon, and featured on the cover of Meat Loaf’s 1993 album Bat Out of Hell II: Back Into Hell, complete with a demonic bat clinging to the top floors.
“It’s very much an iconic building without question,” added Mermelstein.
“There’s a demand for these type of trophy assets and someone will buy it, the question is at what price.”
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