Japan’s Mori Building Takes 49% Stake in SL Green Manhattan Tower Project

Mori Building has acquired a 49 percent stake in a Midtown Manhattan office tower project from SL Green Realty, giving the Tokyo builder its first ground-up development in New York after buying into one of the city’s top skyscrapers less than two years ago.

The deal values the joint venture for 346 Madison Avenue at $175 million, with SL Green retaining a 51 percent interest and serving as development and leasing manager for the project one block from Grand Central Terminal, the Manhattan office landlord said Wednesday in a release. 

The planned 46-storey tower will span 850,000 square feet (78,968 square metres) of rentable space at the former flagship site of clothier Brooks Brothers. The project sits a two-minute walk down Madison Avenue from the 73-storey One Vanderbilt, where Mori Building acquired an 11 percent stake from SL Green in 2024.

“We are pleased to advance Mori Building’s first development project in New York alongside SL Green,” said president and CEO Shingo Tsuji, who added that the partners would combine SL Green’s Manhattan network with Mori’s experience in large-scale Tokyo projects to “create a new landmark that defines New York City.”

Grand Central Bet

SL Green agreed last September to acquire 346 Madison Avenue and the adjacent 11 East 44th Street site for $160 million, describing the properties as a rare opportunity to pursue a ground-up office project in the heart of Manhattan’s Midtown East.

Kohn Pedersen Fox, which designed One Vanderbilt and has worked with Mori Building on projects in Tokyo and Shanghai, is designing the 346 Madison tower with side-core, column-free floor plates and ceiling heights of 15 to 22 feet (4.6 to 6.7 metres).

The all-electric building is planned with nine terrace floors, nine additional floors with loggias and oversized windows throughout, as the partners target top-tier sustainability and WELL certifications.

Amenities are set to span two floors and include a 215-seat auditorium, a tenant lounge with an epicerie operated by Michelin-starred chef Daniel Boulud, and a landscaped terrace overlooking Madison Avenue. Plans also call for a tenant-only fitness centre, spa-quality locker rooms, a regulation-size padel court and a ground-floor restaurant.

The project sits a short walk from Grand Central Terminal, which serves the 4, 5, 6, 7 and Shuttle subway lines, Metro-North trains and the Long Island Rail Road through Grand Central Madison. The site formerly housed the Brooks Brothers flagship, which opened at 346 Madison in 1915 and closed in 2020 after the menswear retailer filed for bankruptcy.

SL Green chairman and CEO Marc Holliday said 346 Madison would “set a new benchmark for innovative office development in East Midtown,” with the REIT’s latest partnership extending a relationship launched through the One Vanderbilt transaction.

“Tenant demand for the highest-quality, best-located and most thoughtfully designed buildings far exceeds available supply,” Holliday said.

Cautious Comeback

The venture comes as Manhattan office leasing activity totalled 7.01 million square feet in the first quarter, 14 percent above the five-year quarterly average but down 11 percent from a year earlier, according to CBRE.

Tenants took up 2.06 million square feet more than they gave back during the quarter, while the borough’s average asking rent was flat with both the prior quarter and year-earlier level at $78.01 per square foot per year, the consultancy said.

Mori Building reported record-high operating revenue of JPY 411.1 billion ($2.6 billion) for the fiscal year to the end of March, up 6.5 percent from a year earlier, with operating income rising 16.2 percent to JPY 97.9 billion as rental income from Azabudai Hills and Toranomon Hills Station Tower helped drive results.

For the current fiscal year, the developer forecasts operating revenue rising 6.3 percent to JPY 437 billion and operating income climbing 8.7 percent to JPY 106.5 billion.

Last month Mori Building launched a JPY 10 billion corporate venture capital fund with Spiral Capital to back startups tied to urban development, smart buildings, mobility, energy optimisation and other city-building themes.