NEW YORK—Sotheby’s 470,000-square-foot building at 1334 York Avenue, Manhattan, is being offered for sale at a reported $500 million. The auctioneer sold the 11-story structure to RFR Holding LLC in 2003 for $175 million (ANL, 12/24/02).
Sotheby’s, which has occupied the 86-year-old structure since 1980, bought it in 2000 for $11 million, investing $150 million in a capital-improvement program that added six floors at the time.
As part of the 2003 sale, Sotheby’s negotiated a 20-year lease with renewal options (which won’t be affected by the sale) and is currently paying rent of $40 per square foot, with planned increases every three years. The deal has been favorable to Sotheby’s, since the current market rate is $60/65 per square foot.
The planned sale by RFR Holding, a German realty investment company, “will have no impact whatsoever on Sotheby’s or any aspect of our business,” said a spokeswoman for the auction house, which is the building’s only tenant. Explains Nat Rockett, a real estate broker at Jones Lang LaSalle, Chicago, which was selected by RFR Holding to handle the transaction: “Based on a sale price of $500 million, the Sotheby’s rent should provide an annual return of 4 to 4.5 percent.”
Sotheby’s New York operations are located in the building, which includes exhibition and storage space for each department.