Extell Development picked up an office property slated for demolition.
Gary Barnett’s company paid nearly $160 million for Williams Equities’ 655 Madison Avenue, according to property records and a Bloomberg report. The 200,000-square-foot tower is located between East 60th and East 61st streets.
Tyko Capital, which is backed by Elliott Investment Management, is financing the acquisition, a person familiar with the matter told the outlet.
The price works out to about $800 per square foot, an indication that Barnett plans to raze the building and build a larger, residential building, perhaps with ground-level retail. A conversion would not likely pencil out at that price. RXR’s Scott Rechler said early this year that developers were generally seeking a basis of $200 to $250 per square foot for conversion properties.
Built in 1951, the 24-story building was last renovated in 2005 and charged office rents between $54 and $66 per square foot, according to CoStar estimates. Tenants have included flexible office space provider Knotel.
Williams principal Michael Cohen said in an April interview with Commercial Observer that the building was one of several in the area that would be “replaced probably by a mixture of retail, hospitality and residential.”
News of the deal comes after fellow developer giant Vanbarton Group went into contract to purchase an office building from the Archdiocese of New York for more than $100 million. The developer is eyeing a residential conversion of the property at 1011 First Avenue in the Sutton Place neighborhood, people familiar with the matter told Bloomberg.
Extell made headlines in the Midtown retail scene this summer when it was announced that Swedish retail chain Ikea would take space at the developer’s new 570 Fifth Avenue tower. Ingka Investment will own 80,000 square feet of retail space and a one-third stake in the remainder of the building, in addition to preferred equity.
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