Boston Properties signs $35.2M ground lease with MTA for supertall dev site in Grand Central

Boston Properties through the entity BP 347 Madison Associates, LLC as tenant signed a $35.2 million ground lease with the Metropolitan Transportation Authority as landlord for four parcels, including the office buildings (O4) at 341, 343 and 347 Madison Avenue in Grand Central, Manhattan.
This is a 102-year lease, expiring August 1, 2125. The Real Deal reported in 2021 on the plan to built a supertall office building on the MTA land, and Boston Properties filed plans in 2022 for a 750,000-square-foot office tower.

The deal closed on August 1, 2023 and was recorded on August 9, 2023. The four properties have 351,871 square feet of built space.
The signatory for Metropolitan Transportation Authority was Robert Paley. The signatory for Boston Properties was Robert Monopoli.

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 347 Madison Avenue.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Boston Properties purchased one property in one transaction for a total of $300 million and has no record it sold any properties over the past 24 months.
The seller Metropolitan Transportation Authority purchased three properties in two transactions for a total of $90.9 million and had not sold any properties over the same time period.

The property

The office building in Grand Central has 351,871 square feet of built space and 25,100 square feet of additional air rights according to a PincusCo analysis of city data. The parcel has frontage of 125 feet and is 125 feet deep with a total lot size of 15,000 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $73.3 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties for the past 24 months. In addition, according to city public data, the properties have received $1,050 in OATH penalties in the last year.

Development

On these lots, there is one active new building construction project for a 750,400 square-foot B building. The project was submitted by Elizabeth Reilly with plans filed August 5, 2022 and it has not been permitted yet.

The neighborhood

In Grand Central, The majority, or 83 percent of the 43.5 million square feet of commercial built space are office buildings, with hotel buildings next occupying 8 percent of the space. In sales, Grand Central has 3.5 times the average sales volume among other neighborhoods with $1.2 billion in sales volume in the last two years and is the 11th highest in Manhattan. For development, Grand Central has 2.6 times the average amount of major developments relative to other neighborhoods and is the 12th highest in Manhattan. It had 2.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 6 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other office buildings in the past 12 months.

The block

On the tax block of 347 Madison Avenue, PincusCo has identified the owners of four of the 13 commercial properties representing 575,874 square feet of the 1,770,975 square feet. The largest owner is Rfr Holding, followed by Brause Realty and then Beacon Holdings Group Llc.
On the tax block, there was one new building construction project filed totaling 750,400 square feet. It is a 750,400 square-foot business (B) building submitted by Elizabeth Reilly with plans filed August 5, 2022 and it has not been permitted yet.

The majority, or 90 percent of the 1.8 million square feet of built space are office buildings, with retail buildings next occupying 9 percent of the space.

The seller

The PincusCo database currently indicates that Metropolitan Transportation Authority owned at least six commercial properties in New York City with 2,704,468 square feet and a city-determined market value of $870.2 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 100 percent of the 2,704,468 square feet of built space are office properties, with specialty properties next occupying 0 percent of the space. They are all located in Manhattan.

The buyer

The PincusCo database currently indicates that Boston Properties owned at least four commercial properties in New York City with 9,551,088 square feet and a city-determined market value of $2.5 billion. (Market value is typically about 50% of actual value.) The portfolio has $1.6 billion in debt, with top three lenders as Wells Fargo, JPMorgan Chase, and Bank of New York Mellon respectively. Within the portfolio, the bulk, or 74 percent of the 9,551,088 square feet of built space are specialty properties, with office properties next occupying 26 percent of the space. The bulk, or 74 percent of the built space, is in Brooklyn, with Manhattan next at 26 percent of the space.

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