What The LinkedIn Sale Says About NYC’s Most Famous Building
Unless you live under a rock, you’ve probably heard about LinkedIn’s purchase by Microsoft for $26.2B.
The business networking social media platform has expanded its office footprint in the Empire State Building several times, most recently by 126k SF last year in a deal that earned a trio of CBRE brokers the runner-up prize for REBNY’s Most Ingenious Deal of the Year.
LinkedIn now occupies a full 10% of the building’s rentable office space—280k SF. The iconic skyscraper held the title of world’s tallest building for longer than any other building in the skyscraper era: 39 years. (It was bested briefly when the World Trade Center’s North Tower tower topped off in 1970, and shortly thereafter by Chicago’s Sears Tower, now called the Willis Tower).
The building’s tenancy has been sparse and piecemeal for much of its life. At once point in the 1960s, it cobbled together as many as 800 small tenants, including tenants low in prestige and footprint, like dentists.
In 2006, Wien & Malkin wrestled full control of the property from its managing and leasing partner, Helmsley-Spear, through a lengthy battle in the courts.
This paved the way for a $550M capital improvement program that restored many of the building’s historic flourishes and was a trailblazer in retrofitting for sustainability.
Today, Wein & Malkin operates as Empire State Realty Trust after it reorganized as a REIT, and the improvements it commissioned have chopped the property’s energy usage by 38%, according to the New York Post.
ESRT chairman & CEO Tony Malkin credits ESRT’s structure as a public REIT, which it has had since 2013, with enabling its stewardship of the building.
“The straightforward governance and unified balance sheet of the REIT allows difficult decisions to be made and capital deployed faster,” Tony told the Post. “While we still have a few more years of consolidating floors and leasing to fewer, better-credit tenants, without ESRT we would be years behind in our conversion from more than 752 individual suites to just over 100.”
Tony has caused feathers to ruffle and heads to be scratched with bold declarations that he’s uninterested in renting to tech tenants (ignoring the business of building's largest tenant). ESRT has also grabbed some headlines for tenants it has signed, not just ones it’s declared it doesn’t want.
Starbucks, for one, has no fewer than three locations within the building, one of which piloted a new coffee delivery service.
That’s on top of snagging a number of solid tenants like the stock image licenser Shutterstock and the high-end timepiece maker Bulova.
SEC filings list the building’s occupancy at 90% as of Q1 ’16, and it hasn’t come from offering cheap rents, exactly: according to the Post, asks these days range from the mid-$60s/SF to as high as $82/SF. [NYP]
