Tishman Speyer and The Cooper Union for the Advancement of Science and Art have finalized a 150-year ground lease agreement for the Chrysler Building, a New York City icon and one of the most recognizable buildings in the world.
The lease includes an investment of $235 million and ground lease payments to Cooper Union. Tishman Speyer will restore the landmark 77-story Grand Central office tower located at 405 Lexington Avenue. Tishman Speyer is joined in the transaction by multiple global institutional investors with the Public Sector Pension Investment Board (PSP Investments) as a lead investor.
“We are pursuing an ambitious plan for the Chrysler Building at a historically strong moment for the Manhattan office market,” said Tishman Speyer CEO Rob Speyer. “We are thrilled to lead this beloved building’s next chapter. Just as we have done through new developments like The Spiral and our continuous reinvention of Rockefeller Center, we will create an environment that will make our customers proud and excited to work here every day.”
As a long-term investor in real estate, PSP Investments is partnering with Tishman Speyer and other institutional investors to support the repositioning of one of New York City’s most iconic office buildings.
“This transaction reflects our deliberate investment strategy in prime office: acquiring high-quality assets in the strongest locations and executing a clear business plan alongside a proven global partner,” said Simon Marc, senior vice president and global head of private equity and real estate investments at PSP Investments. “The Chrysler Building is one of the world’s most renowned landmarks, directly connected to Grand Central, and we are proud to be part of its transformation.”
Originally built to house the Chrysler Corporation, the William Van Alen-designed building features decorative elements inspired by automobile parts and once held a car showroom in the lobby. The Chrysler Corporation was headquartered in the building for more than two decades. At 1,046 feet, the tower held the distinction as the world’s tallest when it opened in 1930. Located on Lexington Avenue between 42nd and 43rd Streets, the tower features direct access to Grand Central Terminal.
Tishman Speyer will undertake an extensive building improvement and hospitality program at the 1.3 million-square-foot tower. The investment aims to reposition the Chrysler Building as a boutique office building, pairing one of the world’s most iconic addresses with a workplace experience designed for today’s customers. Tishman Speyer and its partners will deploy 100% equity to finance the ground lease and its redevelopment plan.
“This was a singular opportunity to identify the best partner for the long-term stewardship of an extraordinary New York City landmark and for The Cooper Union as we work to advance and sustain full-tuition scholarships for all undergraduates,” said Cooper Union Vice President of Finance and Administration John Ruth. “Our leadership team and board of trustees, informed by expert advisors, conducted a deliberate, strategic, and thorough process, and there was great interest in the property as evidenced by the competitive proposals we reviewed and considered. Tishman Speyer emerged as the clear leader. We are confident that the Tishman Speyer team is the right team and understands the significance of this ground lease to the city and to the mission of The Cooper Union.”
Tishman Speyer will reserve the Chrysler Building’s 61st floor — renowned for its massive eagle gargoyles modeled after the hood ornament on the 1929 Plymouth — for an indoor-outdoor amenity program. The floor will feature an upscale lounge with outdoor access boasting spectacular views, premium food and beverage offerings and gathering space. A second amenity program, featuring fitness, wellness and meeting spaces, will be situated within the Chrysler Building’s underground arcade.
In what it said will be “a distinct competitive advantage,” Tishman Speyer will prebuild 75% percent of the Chrysler Building’s current and upcoming vacancy with ready-to-occupy suites. The prebuild approach, which Tishman Speyer successfully applied to its neighboring 6 Grand Central tower, allows for customers — particularly smaller users — to move in quickly.
The transformation will also include restoration of the building’s façade and polishing and renewal of its distinctive crown. Within the building, Tishman Speyer will modernize the mechanical, elevator, electrical and air handling systems, and optimize the cooling towers for energy efficiency.
The Cooper Union – a private college founded by inventor, industrialist and philanthropist Peter Cooper in 1859 – has owned the land on which the Chrysler Building was built since it was granted to the institution by Cooper’s children in 1902. The land is intended to serve as a permanent source of financial support for the school’s mission. The long-term ground lease to Tishman Speyer comes as the college is amid a plan to restore full-tuition scholarships for all undergraduates.
“The significance of this agreement is ultimately about what it makes possible for generations of Cooper Union students,” said Steven W. McLaughlin, president of The Cooper Union. “For more than a century, the Chrysler Building has helped sustain Peter Cooper’s vision of opening access to education by removing financial barriers. We have a responsibility to be caretakers of that promise, to build upon it, and to leave Cooper stronger for those who come after us. This agreement is part of an integrated financial plan that gives us the framework to confidently pursue that goal.”
The Cooper Union was advised in this matter by Steve Klein, partner, Gibson Dunn and David Heller, vice chairman, Capital Markets Group, Savills North America.
