Oxford Properties Group, the real estate arm of the Ontario Municipal Employees Retirement System (OMERS), announced this week that it had agreed to pay $575 million for 450 Park Avenue. Somerset Partners and the Michael Tabor family trust, which has owned and operated the building since 2007, sold the 33-story building to Oxford; terms of the deal were not disclosed. According to a New York Times article, the sale is one of the highest prices ever paid for a Manhattan office building at over $1,700 per square foot.
"We felt comfortable investing a large amount of cash in this quality location and asset," Keith Rubenstein, a Somerset founder, said in an e-mail to Bloomberg. "The thinking back then was this location was bulletproof, would withstand any downturn in the market and value would recover faster. Looking back, I guess we were right."
"A lot of pension funds, Asian companies, sovereign funds and other investors are increasing their allocations for real estate," said Douglas Harmon of Eastdil Secured, the broker on the Park Avenue deal. "If you do that, the first place you want to be is Manhattan."
Formerly known as the Franklin National Bank building, 450 Park Avenue was built in 1972 by Emery Roth and Sons and renovated in 2007 when Somerset Partners purchased the property for $509 million. As noted by the NYT, Oxford is betting that the property will become more valuable when the developer Harry Macklowe completes the tallest residential tower in the Western Hemisphere, a 1,398-foot skyscraper next door at 432 Park Avenue.
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