Commercial Real Estate Datapoint of the Day

In April last year, the New York Observer declared the GM Building to be "the most valuable building in the world," and quoted Scott Latham of Cushman & Wakefield as saying it was worth more than $4 billion.

Today, the WSJ reports the GM Building is likely to be sold - for $2.8 billion.

That's a price drop of 30% in the space of a year. On the other hand, seeing as how the building was bought for $1.4 billion in 2003, it's managed to go up by an average of of 15% a year over those five years, and is still worth twice what the Macklowes paid for it.

I have to say I was wrong about this one. I thought that this particular trophy building would attract more interest, especially from foreigners taking advantage of the weak dollar. But it was not to be, and it seems that the building is going to be sold to a US consortium led by Goldman Sachs and Boston Properties, although it does apparently include "two Middle Eastern investors" as well.

I was right that the sale price of the GM building was going to set a new all-time record: $2.8 billion is a full billion dollars more than previous record of $1.8 billion set by 666 Fifth Avenue. Still, by real-estate standards, the sum is relatively modest: another Goldman-organized consortium, this time with Related, plans to spend $15 billion to develop the Hudson Yards site on the west side of Manhattan.

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