TIAA-CREF Hunts for Big Tenants to Fill 500,000 Square Foot Manhattan Office Building
New York City-based TIAA-CREF, which stands for Teachers Insurance and Annuity Association-College Retirement Equities Fund, sensed it had a good deal recently when it purchased the 50-year-old, 559,000-square-foot, 33-story office tower at 685 Third Avenue on the East Side of Manhattan.
But the seller, Pfizer Inc., is vacating the building shortly because it is consolidating most of its New York commercial real estate holdings.
That will leave TIAA-CREF, a pension fund, with an empty office tower.
TIAA-CREF paid Pfizer about $190 million or about $340 per square foot in cash for the building between 43rd and 44th Streets, according to The Wall Street Journal.
Pfizer had bought it in 2003 for $250 million or about $447 per square foot.
The interest in the building comes amid signs that Manhattan's office leasing market is stabilizing after getting deluged by millions of square feet of vacant space during the downturn, according to the WSJ.
The pace of deal-making has increased as companies have added jobs, rents have stabilized and tenants have come off the sidelines, the newspaper reports.
TIAA-CREF says it's eager to buy more.
TIAA-CREF is scouring Midtown for deals and could add "a couple more" properties to its Big Apple portfolio in the next 18 months, Mark Wood, head of U.S. acquisitions for TIAA-CREF Global Real Estate, told the WSJ.
It is also looking to buy market-rate rental apartments.
"We think we're reaching the bottom," said Wood of the New York market. "The fundamental conditions are not as bad as originally forecasted to be and supply is constrained so we see the future as being relatively bright."
TIAA-CREF is one of the country's largest institutional real-estate investors with a $48 billion global portfolio of direct and indirect real estate investments.
Its New York portfolio also includes its headquarters at 730 Third Ave., additional office buildings at 780 Third Ave. and 470 Park Ave. South, and an apartment complex known as The Colorado.
TIAA-CREF's acquisition of Pfizer's building this summer was its first Manhattan purchase since 2007.