The longtime family owners of the ground under 625 Madison Ave. decided it was time to sell, and hired Cushman & Wakefield to market this land under the 563,000-square-foot Class A office building, which pays rent.
While only three are nominated due to REBNY rules, the full team representing 625 Ground Lessor, LLC, included Brian Corcoran, Helen Hwang , Steve Kohn, Frank Liantonio, Marc Nakleh, Nat Rockett, Karen Wiedenmann and Sujohn Sarkar.
The 17-story building built in 1956 was renovated in 1988. The operating lease is owned by the real estate investment trust SL Green Realty Corp. While this lease does not end until 2054, the current $4.6 million rent per year has resets both in 2022 and 2041.
It occupies the entire east side blockfront of Madison Ave. between East 58th and 59th Streets. It runs 200 feet towards Park Avenue along 59th, and 150 feet on 58th Street.
Polo Ralph Lauren occupies 70 percent of the office floors while tenants in the 30,500 square feet of retail include Lavo, Swarovski, Wolford and Canali.
The C&W team was able to sell it for what its press release described as “exceptional pricing” of $400 million to Ben Ashkenazy and Michael Alpert of Ashkenazy Acquisition Corporation.
This mere starting yield of 1.15 percent reflected low interest rates, escalating land values prompted by strong residential and retail markets, and the scarcity of ground lease offerings.
But the key to the high price was recognizing that for the rent reset the ground would be appraised as vacant land but improved to its highest and best use at that time. The rent is calculated on 4.5 percent of that valuation, expected to be at least $1 billion based on today’s prices. That equates to the expectation of a rent leap to a whopping $50 million per year.
