Citadel, Vornado Buy Air Rights for 350 Park Avenue Tower

Citadel and Vornado Realty Trust have agreed to buy for $164M up to 525K SF of air rights from the Roman Catholic Archdiocese of New York, rights the partners will use to develop a 51-story office tower at 350 Park Avenue.

The partnership, which includes Rudin Management, will pay the Archdiocese $312.50 per SF for the air rights, which are adjacent to St. Patrick’s Cathedral on Fifth Avenue, according to a report from PincusCo.

The deal includes a $62.50 per SF contribution to the Public Realm Improvement Fund, a Midtown East group, for improvements to the business district.

According to the report, the developers have the option to purchase air rights ranging from 315K SF to 525K SF. The deadline to acquire the full 525K SF is the end of 2026.

Citadel, Vornado and Rudin have been planning to build a 1.7M SF tower that would replace three properties at 350 Park Avenue. The new skyscraper will become Citadel’s Manhattan headquarters, with Ken Griffin’s firm planning to occupy 850K SF of the 1,350-foot-tall tower.

A court filing disclosed that an LLC representing the partners reached an agreement with the trustees of the Cathedral for the development rights owned by 631 Fifth Avenue, the address of the iconic landmark.

“it is our hope that the money will go to the continued upkeep of the Cathedral,” said Joseph Zwilling, director of communication for the Archdiocese of New York, according to a report in Bloomberg.

A year ago, in December, a joint venture between Vornado and Rudin Management Co. cut a deal with Citadel Enterprises America that will facilitate the building of the new skyscraper.

Citadel will master lease 350 Park Avenue, a 585K SF office tower owned by Vornado, and 40 E. 52nd ST., a 390K SF building owned by Rudin. According to the terms of the deal, the companies have agreed to a 10-year “as is” lease with an annual rent of $36M.

Vornado also partnered with Rudin to acquire 39 E. 51st, an adjacent 11K SF building. The plan is to combine the three properties and build a new tower on the consolidated sites. Vornado purchased 350 Park Avenue in 2006 for $542M.

According to the terms disclosed last year, Citadel has an option to acquire a 60% stake in the $1.2B development that will rise on the merged properties of 350 Park Avenue, 40 E. 52nd St. and 39 E. 51St. in Manhattan’s Midtown East market.

Citadel will have the right to exercise its option for a majority of the partnership from October 2024 until June 2030, with Vornado retaining a 36% share and Rudin becoming a 4% partner with a $250M preferred equity interest.