America's 10 Biggest Real Estate Deals: Manhattan Dominates
Nov 3rd 2010 11:00AM
Updated Nov 3rd 2010 11:12AM
As Google (GOOG) reportedly ponders buying its New York City headquarters for a cool $2 billion -- which would make it one of the largest real estate transactions in history -- 24/7 Wall St. thought it would be instructive to look back at the biggest such deals to date in the U.S.
It turns out the deal for 111 Eighth Ave. would be only the third-largest in U.S. history. To compile our list, we started by cataloging all large purchases of land by the U.S. government, corporations, nonprofits and wealthy individuals. We also consulted with Real Capital Analytics, a global real estate research and consulting firm.
What we found was a remarkably homogeneous bunch of deals. Even after adjusting for inflation, the largest transactions were all in Manhattan in the past decade. Most are office buildings. Only one is a residential complex.
"As the premier global economic center, Manhattan is one of the most expensive real estate markets in the world," says Dan Fasulo, managing director at Real Capital Analytics. "Combine that with large buildings, and it's not surprising that all of the top 10 transactions are located here."
And here they are -- the 10 biggest real estate deals in American history:
1. Stuyvesant Town -- $5.3 billionOriginally developed by Metlife in the 1940s, Stuyvesant Town was a rent-stabilized housing complex for middle-class New Yorkers for decades. In 2007, the Lower East Side complex of 110 14-story buildings became the subject of the largest real estate transaction in U.S. history when a syndicate of investors, headed by Tishman Speyer and JV Blackrock Realty, bought the complex with the intention of turning "Stuy Town" into an upscale, mid- to high-rent development. A floundering economy and the burst real estate bubble in 2008 dealt a crushing blow to Tishman's venture. In January of this year, the owners, loaded with debt, turned the property over to creditors.
2. GM Building -- $2.8 billion
Purchased by Boston Properties, Goldman Sachs (GS), and Meraas Capital in 2008, the General Motors Building went for an astounding $2.8 billion after the credit crisis forced the Macklowe Organization to sell. This makes the acquisition the single most expensive purchases of an individual building ever. It also speaks to the importance of prime real estate: The 50-story building only takes up 0.32 acres.
3. Rockefeller Center -- $1.85 billion
In December 2000, Rockefeller Center, the building complex that's home to Radio City Music Hall, the GE Building, the Bank of America Building and several other high-profile properties, was sold by Goldman Sachs and Tishman-Speyer to Lester Crown for $1.85 billion. The oldest site on our list, Rockefeller Center was built between 1930 and 1939 by John D. Rockefeller Jr., scion of the wealthiest man in American history. A popular tourist destination, it's now a National Historic Landmark. Goldman Sachs Group bought the complex in 1996 for $900 million. Encompassing 22 acres, including its famed ice skating rink, the complex takes up the second-largest land area after Stuyvesant Town.
4. 666 5th Ave. -- $1.8 billion
When purchased in January 2007, for $1.8 billion, 666 Fifth Ave. was the most expensive single office building. The scale of the deal is even more impressive considering that only seven years prior, the building had been bought by Tishman Speyer for $518 million. Located in the Midtown West portion of Manhattan, it's now home to a number of retail stores, such as Brooks Brothers and the NBA Store, large international law firms and, of course, Citigroup (C), whose logo is prominently displayed on the building's side.
5. Worldwide Plaza -- $1.74 billion
Worldwide Plaza sold for $1.74 billion in February 2007 to Macklowe Properties. Some two-and-a-half years later, however, in July 2009, Deutsche Bank sold the same property for about $600 million. This represents a drop in property value of about 65%, demonstrating that even iconic New York real estate is subject to dramatic market fluctuations.
6. MetLife Building -- $1.72 billion
In 2005, MetLife sold the building bearing its name to real estate giant Tishman Speyer for $1.72 billion -- at the time, the most expensive real estate purchase in history. The 58-story building, formerly known as the Pan Am building, was built in 1963 and served as the airline's headquarters until MetLife bought it in 1981, and Pan Am moved its operations to Miami. The airline collapsed shortly after. The building's iconic MetLife sign was the last of its kind to be built before a city ordinance disallowed corporate signage on the tops of large buildings.
7. Travelers Complex -- $1.58 billion
In December 2007, when Citigroup was looking to reduce its real estate exposure, it sold this two-building complex in the Tribeca area to investment group SL Green for $1.58 billion. Built in 1987, the buildings at 388 and 390 Greenwich, are 40 and 10 stories, respectively. The complex is located 10 blocks from the former World Trade Center site. On Sept. 11, 2001, the main building was used as a triage center for the wounded.
8. News Corp. Building -- $1.52 billion
At 1211 Avenue of the Americas, the News Corp. Building was sold to Beacon Capital Partners and Lehman Brothers for $1.52 billion in 2006. The seller's broker for this deal was Eastdil Secured, the same power broker that oversaw two other property transactions on our list. The building now contains the offices of many prominent companies, including the many divisions of News Corp. (NWS), law firm Ropes & Gray, Wachovia, and JPMorgan (JPM).
9. 1301 Avenue of the Americas -- $1.46 billion
In August 2008, Paramount Group and Allianz Life Insurance purchased the 46-story building at 1301 Avenue of the Americas. At the time, it was called the Crédit Lyonnais Building, named after the French bank, its primary tenant. In February of this year, however, Calyon, which acquired Crédit Lyonnais in 2003, changed its name to Crédit Agricole. Since then, the building has also been referred to as the Calyon Building or the "Crédit Agricole Building. Prior to the acquisition, it was the headquarters of PricewaterhouseCoopers, before the accounting and consulting firm moved to its current home at 300 Madison Ave. in 2004.
10. Five Times Square (The Ernst & Young Tower) -- $1.28 billion
By far the most modern building on our list, 5 Times Square was built in 2002 for Ernst and Young. In 2007, owner Boston Properties sold it to AVR Realty for $1.28 billion.The building, which features a sloping facade, has no 90 degree angles. It houses many retailers and is a valuable tourist shopping destination.
Land Barons Take Note
None of the properties on our list were large by acreage. Even America's biggest land deals to buy vast parts of the country -- the Louisiana Purchase and the purchase of Alaska -- amounted to transactions that were only in the hundreds of millions of dollars, even when adjusted for inflation.
On the residential side, several private homes have been sold for nearly $100 million -- but that's hardly enough to make our list. John Malone, the cable magnate, paid $83 million for the Bell Ranch in New Mexico, covering 453 square miles. Many large properties are valued at more than this, but they were cobbled together in a series of small purchases over a number of years. This is true of the vast land holdings of former media mogul Ted Turner. None come close to the billion-dollar-plus figures for commercial real estate.
Even when analyzing sales across the country for the past few hundred years, it still holds true that what matters most in real estate is location. And for mega-deals, Manhattan is the place to be.