CommonWealth Partners Buys Hudson Commons For $1B
Given that the parties have been calling the building the “office of the future,” the price is significant.
CommonWealth Partners is paying $1.03 billion for Hudson Commons—25-stories and 697,958 sq. ft. at 441 Ninth Avenue—which was sold by Cove Property Group and The Baupost Group. CBRE brokered the deal.
The property has LEED Platinum status and is the adaptive reuse of an old factory warehouse that included a glass overbuild.
Given that the parties have been calling the building the “office of the future,” the price is significant.
Uncertainty in office markets has been rampant. In September, the overall actual office occupancy rate—meaning people working in offices, not the amount of space leased—in New York City was only 20%, according to LD Salmanson, co-founder of real estate data firm Cherre.
Valcre has estimated that occupier demand for office space could take up to five years to push property values to pre-pandemic levels.
At the same time, many companies have already factored property leases into their financial planning. If employees work at home, there is little additional cost, which maintains operational margins. They then retain access to the property if they need it.
More than a billion dollars is a significant bet that workers will return to offices and leasing, at least for Class A and A+ properties, will continue unhindered.
Cove and Baupost had purchased the building in 2016 for $330 and then obtained $479 million in construction financing in November 2017 to convert the original building to the new structure. Then in November 2018, Peloton announced that it would move its headquarters to the site, occupying the fourth through 10th floors and a 13,000 sq. ft. basement.
More recently came refinancing. Blackstone Mortgage lent $724.2 million in November 2019. Cove landed construction and mezzanine loans from Parlex 1 Finance, Parlex 2A Finco, and Parlex 3A Finco, affiliates of Blackstone Mortgage Trust, to swap with the existing loans from Apollo Global Management and JPMorgan Chase.
“The world-class combination of an old factory warehouse with a stunning, healthy and efficient modern tower has been a beacon for tenants and a standout in the creation of a new trophy property,” Darcy Stacom, chairman and head of New York City capital markets for CBRE, said in prepared remarks.