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REA
May 16, 2018  

JP Morgan Shopping 425 Lexington Avenue

J.P. Morgan Asset Management is marketing a Midtown Manhattan office tower that could be worth $750 million.

The 749,000-square-foot property, at 425 Lexington Avenue in the Grand Central submarket, is fully leased. The estimated value works out to some $1,000/sf. HFF is representing J.P. Morgan, which controls the building on behalf of institutional investors that it advises.

The listing is one of the largest of the year in Manhattan. Only three office properties have traded or gone under contract for more than $400 million since yearend.

While the offering is geared toward core investors, lead tenant Simpson Thacher will vacate 40,000 sf around yearend, providing a buyer with the potential to lease that space at a higher rent.

Simpson Thacher, which leases some 600,000 sf, renewed its contract in 2013 for 20 years. It subleases about 60,000 sf of that space to another law firm, Holwell Shuster, according to local reports. CIBC is also a tenant. There is some 15,000 sf of street-level retail space that includes a Bank of America branch and a Pret A Manger eatery.

The 31-story property, which stretches from East 43rd Street to East 44th Street on the east side of Lexington Avenue, was built in 1988. J.P. Morgan bought it in 2013 for $664.4 million, or $887/sf, from Hines U.S. Core Office Fund, operated by Houston investment manager Hines and Sumitomo Life Realty. CBRE and Eastdil Secured jointly brokered that sale.

The glass tower, which achieved a LEED silver designation in 2015, has a distinct cantilevered top designed by architecture firm Murphy/Jahn. It features gardened terraces on three floors. The building is across the street from the Chrysler Building and an entrance to Grand Central Terminal.

The surrounding Grand Central submarket has 45.9 million sf of space that is 87.1% occupied, according to Newmark. The average asking rent is $70.06/sf, compared to $80.51/sf throughout Midtown Manhattan.