SL Green Realty, Manhattan’s largest office landlord, has sold a 49% stake in its planned ground-up office tower near Grand Central Terminal.
Japan’s Mori Building — also a holder of a stake in SL Green’s nearby One Vanderbilt — acquired the minority interest, forming a joint venture on 346 Madison Ave., an 850,000-square-foot, 46-story tower planned one block from Grand Central and across from One Vanderbilt, SL Green said Wednesday. SL Green will retain 51% and project control.
The deal implies a gross valuation of $175 million; a spokesperson for SL Green declined to provide more details. It marks Mori Building’s first ground-up development in New York, according to Shingo Tsuji, the company’s president and chief executive.
“By uniting the expertise and networks of both SL Green, a driving force in shaping Manhattan’s urban landscape, and Mori Building with its deep experience in large-scale urban development in Tokyo, we will create a new landmark that defines New York City,” Tsuji said in a statement.
The planned tower follows SL Green’s acquisition last year of the former Brooks Brothers flagship site and an adjacent property. It comes as demand for top-tier offices near transit hubs such as Grand Central continues to drive leasing in Manhattan. Vacancy for premium East Midtown properties fell to 3.4% at the first quarter's end, SL Green Chief Executive Marc Holliday said in April.
That scarcity has pushed top office rents above $320 per square foot, including recent deals at One Vanderbilt.
“Tenant demand for the highest-quality, best-located, and most thoughtfully designed buildings far exceeds available supply,” Holliday said in Wednesday’s statement.
Other major projects are also planned nearby.
BXP is developing 343 Madison Ave., a 930,000-square-foot tower with direct access to Grand Central. Vornado is planning a 1.85 million-square-foot tower at 350 Park Ave. with Rudin and Citadel, though Citadel has recently signaled the project is not yet guaranteed.
Designed by Kohn Pedersen Fox, the new tower will feature side-core, column-free floor plates and ceiling heights ranging from 15 to 22 feet. The all-electric building will include nine terrace floors and nine additional floors with loggias, along with oversized windows.
Amenities will span two floors and include a 215-seat auditorium, a tenant lounge with a convenience store operated by Michelin-starred chef Daniel Boulud, and a landscaped terrace overlooking Madison Avenue.
A wellness center will include a tenant-only fitness facility and a regulation-size padel court — a rarity in office buildings. A ground-floor restaurant is also planned.