Manhattan Office Tower to Undergo $63M Revamp
Waterman Interests has entered a partnership with HPS Investment Partners to redevelop 850 Third Ave., a 21-story, 605,000-square-foot office tower in Manhattan. Project costs were estimated at $62.8 million in January.
The property’s improvements will contribute to attracting leases with high-growth tenants in the technology-focused industries of cybersecurity, green economy and artificial intelligence. Cushman & Wakefield and Newmark will lead the leasing and marketing efforts.
HPS acquired the asset for $226 million from Chetrit in 2023, and subsequently obtained $58 million in tax breaks through the Manhattan Commercial Revitalization Program. The program’s scope is to aid aging properties that struggle with high vacancy rates.
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The building at 850 Third Ave. came online in 1961, with the original design provided by Emery Roth Architects. Upon the redevelopment’s completion, the tower will encompass nearly 11,000 square feet of retail space, 593,000 square feet of office space and roughly 5,500 square feet of amenity space. The project marks the first major renovation at the property since 2008.
Plans call for green terraces on five separate floors and a 70-guest conference space on the 21st floor, as well as the creation of a 5,000-square-foot childcare center. The currently vacant ground-floor retail space will include a restaurant featuring floor-to-ceiling windows. The lobby will also be upgraded and set to include a separate entrance for an anchor tenant.
With both Central Park and The Empire State Building within a 1-mile radius, 850 Third Ave. is within walking distance of the Grand Central Terminal. Roughly 5 miles away, 175 Water St.—the former AIG headquarters—received $40 million in tax breaks from M-CORE for capital improvements.
Manhattan’s dynamic office environment
Manhattan’s office vacancy rate stood at 17.6 percent in April, up 80 basis points year-over-year, according to a CommercialEdge report. However, the borough’s index remained below the national average, which rose 210 basis points year-over-year to 18.8 percent.
Almost breaking into the nation’s top 10 largest office supply pipelines by volume, Manhattan had more than 2.7 million square feet of office space under construction that month, according to the same source.
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