Aging NYC office building shows how to succeed despite trend toward shiny new towers
Let’s say you own a 60-year-old, near-900,000 square-foot Midtown office building. Demand for space in Midcentury buildings is weak. A half-billion-dollar mortgage payment is coming up.
Do you:
Scramble to refinance when lenders are getting cold feet?
Complain to the New York Times that it’s the worst season for property owners since the Biblical floods?
If you’re Germany’s Munich Re, the world’s largest reinsurance company, you do neither. You just dip into petty cash and pay off the $500 million Wells Fargo loan in full — as it just did with 330 Madison Ave. at East 42nd Street, sources told us.
The 850,000 square feet tower across the avenue from One Vanderbilt is proof that buildings don’t need to be brand new to thrive. It’s offices floors are 98% leased and storefronts are leased to Citibank, Santander and Swedish luxury men’s shirtmaker Eton.
“It’s virtually unheard of for an owner to pay down such a big loan these days, but Munich Re doesn’t want to have debts on any of its buildings,” a source said. “When they assumed the loan they had every intention of paying it off.”
The tower, which is managed by Munich Re’s asset management arm MEAG, represents the company’s “flagship entry” into the Manhattan real estate market, as a source put it.
Since it bought the building for $900 million in 2020 just before the pandemic, Munich Re has signed 260,000 square feet of new office leases. Rents that were in the $60s-70s per square foot three years ago are now over $100 psf, the sources said.
The largest tenant is hedge fund and money manager Guggenheim, which owns the Los Angeles Dodgers, with 275,000 square feet. Other notable tenants include real estate brokerage JLL, Deutsche Bank AG, HSBC and Maverick Real Estate Partners, which moved from 100 Park Ave. into 10,000 square feet at 330 Madison earlier this year.
The landlord made significant investments in the property and is creating a tenants-only terrace amenity on the 16th floor to include outdoor event space with a wraparound terrace, a full service bar, and lounge seating. For good measure, 330 Madison stands on top of an entrance to the No. 7 line Grand Central station stop.
