Irvine Company has found some extra space to lease in its most valuable building, where it’s poised to create the priciest floor in its nearly 500-building office portfolio.
The Newport Beach-based real estate company has been making some notable upgrades to the MetLife Building at 200 Park Ave. in Manhattan, N.Y., including the creation of penthouse office space, according to a recent report from New York-based Kroll Bond Rating Agency.
Irvine Co. has been an investor in the 58-story tower for nearly a decade but only acknowledged having a majority stake in the office last month.
Company executives said Irvine Co. now owns about a 97.3% stake in the nearly 3-million-square-foot building, which carries an appraised value of about $3.1 billion. It’s one of New York’s most prominent and valuable buildings.
Irvine Co.’s role in the property came to light last month as banks reported working to arrange a $1.4 billion refinancing deal for a mortgage originally taken out on the property by the building’s former majority owner, New York-based Tishman Speyer Properties LP, which remains the property manager of the building.
The new loan has a 10-year term at an interest rate of 3.6%, with annual debt service of about $51.1 million, according to Kroll’s new report on the financing deal.
The building’s existing space is 99% leased—insurer Metropolitan Life will account for 20% of the total after signing a new deal there.
‘Premium’
The high-end office space coming to the building’s top floor will command premium rents, according to the report.
“$16.8 million was recently invested in redeveloping the 58th floor that was previously used for mechanicals but now serves as premium penthouse office space with unobstructed views of northern and southern Manhattan,” according to the report.
The space is 15,874 square feet, about a third the size of the upper floors it tops off.
The penthouse is already preleased to J. Fitzgibbons LLC, a New York-based investment office. The 15-year lease starts in October, according to the report.
The report indicated that the new tenant will pay monthly rents of $8.26 per square foot, the highest in the building.
That’s not a record for Manhattan—some buildings along Fifth Avenue command monthly rents approaching $9 per square foot, according to data from brokerage JLL.
The rent on the penthouse is believed to be the highest ever reported for a large office space that Irvine Co. owns.
Rents Elsewhere
Buildings the company owns in Newport Center carry monthly rents that exceed $5 per square foot. The developer is said to be seeking rents approaching $7 per square foot for the top floors of its new 520 Newport Center tower, although no deals at that price have been reported to date.
Available space at the three skyscrapers the company owns in Chicago have monthly rents in the $3-per-square-foot range, according to the website for the company’s office division.
Towers it owns in Los Angeles and a building it has under development in the La Jolla area of San Diego, have monthly rents that are a little lower in the $4-per-square-foot range.
Rents for available space at Irvine Co.’s low-rise buildings in Silicon Valley tend to be less than $4 per square foot, according to the company’s website.
The new $1.4 billion CMBS loan for the MetLife tower will be used to retire $1.2 billion of existing debt; fund $60.0 million of landlord obligations; pay $18.4 million in closing costs; and return approximately $153.6 million to the building’s owners, according to the Kroll report.
Bank of America and Wells Fargo are the originators of the new CMBS loan.
