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Manhattan-based investment company Waterman Interests announced Wednesday that it is teaming up with the global firm HPS Investment Partners to redevelop 850 Third Ave. — a 605,000-square-foot office building in Midtown that, together with another nearly-empty tower in the Financial District, locked in $100 million in tax breaks earlier this year in an attempt by the city to reinvigorate the ailing market.
The 21-story building, between East 51st and East 52nd streets, plans to transform its decrepit offices into an amenity-rich space, bolstered by the city incentive. The tax-break program, known as Manhattan Commercial Revitalization, or M-CORE, propels landlords to convert older offices south of 59th Street into high-quality buildings that are more appealing to workers.
A 31-story office building at 175 Water St. was the other tower to land the tax break as part of the program. It was recently rebranded with a new name — Water Street Associates or WSA — and a new address — 161 Water St. — to attract more creative-type tenants, New York Magazine recently reported.
HPS Investment Partners acquired the circa-1961 Third Avenue property last year for nearly $266 million from developer Jacob Chetrit, who bought it for $422 million in 2019. The building’s largest tenant, Discovery Communications, departed in 2020, contributing to a recent vacancy rate of 67% — equivalent to about 400,000 square feet that’s currently available. And the firm only expects the building to continue losing tenants and hit a vacant rate of 86% within three years, Crain’s reported in January.
Waterman has previously led successful office redevelopment projects at both 390 and 400 Park Ave. and is looking forward to doing the same at 850 Third Ave., said Joseph Tansey, managing director of HPS.
Francisco Miranda, a spokesman for Waterman, however, declined to provide more details about the building’s forthcoming redevelopment, including how much it’s expected to cost, when the renovation would begin or a timeline for completion. But Crain’s reported in January that in return for $60 million worth of renovations, the building’s property taxes and other obligations would be frozen for 20 years, resulting in a tax savings of $58 million.
The city also estimated at the time it announced the incentive that it would eventually profit $600 million in tax benefits as a result of the work to attract more tenants.
“With 850 Third we have an extraordinary opportunity to reintroduce the property as a sought-after address,” said Simon Wasserberger, managing director at Waterman.
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Julianne Cuba , 2024-05-23 19:14:06
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