Korea’s National Pension Service and US developer Hines have teamed up to buy a 49.5 percent stake in a $2.3 billion New York redevelopment that lead architects Kohn Pederson Fox are billing as one of the jewels of 21st century New York.
NPS and Hines have jointly committed to invest at least $492.2 million in the One Madison Avenue project, purchasing the ownership share from Manhattan’s largest office landlord, SL Green.
The New York real estate giant said in an announcement that it would co-develop the 1.4 million square foot (130,064 square metre) project with Hines to create a 26-storey office tower overlooking Madison Square Park in the city’s Flatiron district.
The project, which the partners aim to complete in 2024, marks the second time in three years that Korea’s $628 billion state pension fund has joined forces with SL Green and KPF on a New York project, after it bought a 27 percent stake in the currently under-construction One Vanderbilt from the office landlord for $500 million in 2017.
Redeveloping a Manhattan Landmark
“One Madison Avenue will be a market-leading building at the doorstep of Madison Square Park, and the National Pension Service of Korea is excited to join SL Green in another marquee project that will strengthen our already proven partnership,” said NPS’ head of real estate Scott Kim.
Located just a three-minute walk from the city’s Flatiron Building, the redevelopment will incorporate the property’s existing mid-century masonry podium.
A new 17-storey glass and steel tower in the Midtown South commercial area, which also houses some of New York’s poshest apartment buildings, will be built on top of the original property after demolishing it down to the ninth floor, making way for a new structure with virtually column-free floorplates, according to KPF.
The New York-based architectural firm, whose Lotte World project in Seoul was recognized as the best new skyscraper in the world in 2018, said that the design of the Manhattan redevelopment, which is steps away from the 111 year old Met Life Tower, is intended to “establish a dialogue between past and present”.
Garden floors on the tenth and eleventh storeys of the new project will offer 55,000 square feet of interior communal space with 22-foot slab-to-slab ceiling heights together with 29,000 square feet of outdoor terrace space.
The two community floors are intended to create an “elegant transition” from the historic masonry podium to the new tower, according to SL Green.
Braving the Pandemic
SL Green’s chairman and CEO, Marc Holliday, called the redevelopment the “most ambitious adaptive-reuse project” in that part of New York, while adding that it was an “affirmation of New York City’s market resiliency and SL Green’s ability to execute its business goals in a demanding climate”.
Most construction projects citywide have been halted to stop the spread of the coronavirus pandemic, while office leasing in Midtown South has fallen to its lowest level in 11 years, according to a report issued this month by CBRE.
The property consultancy said that leasing activity in April totalled 130,000 square feet – down 72 percent from the five-year monthly average of 467,000 square feet. CBRE noted, however, that the average asking rent was $86.31 per square foot, virtually unchanged from March and up 2 percent from the same month in 2019.
Targeting US Real Estate
Korea’s National Pension Service’s previously established venture with SL Green and KPF, the 77-storey One Vanderbilt in midtown Manhattan, is set to become the fourth tallest skyscraper in New York upon its target completion date in August of this year.
Located on the corner of 42nd Street and Vanderbilt Avenue adjacent to the Waldorf Astoria, the 427 metre tower will have 162,600 square metres of commercial space once complete.
Other Korean investors, including KB Asset Management, have also targeted US real estate this year, with the Seoul-based firm reportedly teaming up with its compatriots at NH Investment & Securities to buy a commercial development in Dallas, Texas for $370 million in February of this year..
In a deal that finally collapsed just a few days ago, Mirae Asset Management had agreed to acquire a $5.8 billion portfolio of US luxury hotels from the former Anbang Insurance before the Korean asset manager sent a termination notice to the insurer alleging breaches of contract last Sunday.