Hedge fund giant Citadel, in the latest validation for midtown Manhattan’s corporate-headquarters heavy Park Avenue, has committed to having an even bigger footprint in the iconic office corridor.
Citadel and an affiliate of billionaire CEO Ken Griffin have reached agreements with Vornado Realty Trust and Rudin, one of New York’s largest privately owned real estate companies, to master lease Vornado’s 585,000-square-foot tower at 350 Park Ave. and Rudin’s adjacent 390,000-square-foot property at 40 E. 52nd St., the landlords said in a statement late Friday. The parties expect to obtain within the next 35 days third-party approvals that are required for the agreements to take effect.
Citadel’s master lease at 350 Park, with an initial annual net rent of $36 million, is on an “as is” basis for 10 years and retroactive to June 15, according to the statement.
Vornado also has entered into a joint venture with Rudin to buy 39 E. 51st St. nearby for $40 million with plans to combine that property with 350 Park Ave. and 40 E. 52nd St. to create a “premier development site” for a new major office tower.
Griffin, from October 2024 to June 2030, will have the option to either buy a 60% interest in a joint venture with Vornado/Rudin that would value the site at $1.2 billion and build a new 1.7 million-square-foot trophy office tower as part of the East Midtown Subdistrict zoning with Vornado/Rudin as developer.
Should the joint venture with Citadel move forward, Citadel or its affiliates will sign a pre-negotiated 15-year anchor lease with renewal options for approximately 850,000 square feet at the new development for its primary office in New York, Vornado and Rudin said, adding rent for Citadel’s space will be determined by the total project cost.
Griffin also has an option to buy the site for $1.4 billion to take Vornado and Rudin out as the project’s developers.
Vornado/Rudin, separately, will have the option from October 2024 to September 2030 to sell the site to Griffin.
East Midtown rezoning seeks to promote new, top-tier commercial buildings in a 73-block area surrounding the Grand Central Terminal transit hub to ensure East Midtown’s office stock remains attractive for many corporate tenants and others, New York’s Department of City Planning has said in a study, adding the average age of office stock in the area is more than 70 years old.
Citadel, founded in Chicago by Griffin, already is the anchor tenant of the new 47-story 425 Park Ave., between east 55th and 56th streets, that recently was completed and marked Park Avenue’s first full-block tower in half a century. Citadel, which was the first to sign on to the building back in 2015, has expanded its footprint at the building to about 415,400 square feet across 20 floors, 425 Park’s developer L&L has said.
The Friday announcement involving Citadel gives another shot of confidence to Park Avenue when there are signs that the corridor and the broader Plaza District may have lost some luster over the past decade to the likes of Hudson Yards, Midtown South or lower Manhattan — areas corporate tenants, seeking to attract young talent, now consider to be more of a live-work-play domains instead of nine-to-five business districts.
JPMorgan Chase is betting on Park Avenue with the construction of its new global headquarters at 270 Park Ave. just a few blocks south between east 47th and 48th streets.