More on the Phillips Move

Fellow appraiser and NYC resident Denny Levy sent me a good article from a few years ago on the building where Phillips is supposed to be moving to, 450 Park Avenue, which set a record for price per square foot. Some will find the NY Observer report about the building and the record pricce, especially those in the NYC area, very interesting, although not really appraisal or art related.

This is from the New York Observer

By John Koblin
July 17, 2007 |

When 450 Park Avenue went to contract two weeks ago, all the talk was of its record-breaking sale price, at nearly $1,600 per square foot. But among developers and brokers there was another point of interest. The question in those circles: Where were the Macklowes?

It was assumed all along—fairly or not—that Harry and Billy Macklowe would purchase 450 Park Avenue once it became available three months ago. The logic went that the Macklowes controlled the development site directly next to 450 Park and needed to somehow justify the hefty price tag that it took to put it together ($440 million for the Drake Hotel and $2,000 per foot for a row of tiny buildings along East 57th Street).

And it was believed that in order to build the best possible office tower and maximize their options in putting it together—a tower the Macklowes have dubbed 440 Park Avenue—it would be best to buy the building right next door.

Of course, they didn’t. The 32-story 450 Park Avenue went to Somerset Partners and Michael Tabor for a record sum.

And although the Macklowes were among the 25 groups that placed a bid on the building, two sources said, they balked at putting down $1,600 per foot.

The question is why.

Perhaps it was a shrewd economic decision, realizing that even the most creative architect would have a tough time designing an office building around a 32-story one, whether it was in the landlord’s hands or not. To own 450 Park would be an added benefit, not a necessity.

“The positive for [Harry] would have been to give himself control and flexibility,” said Michael Falsetta, executive vice president at Miller Cicero, an appraisal firm. “It would have left him more options.”

But perhaps there were other reasons for not buying it. One source familiar with the Macklowes said that if it were for sale last year, there’s no way they would have passed it up.

Indeed, things have changed in the past few months for the Macklowes.

After their major $7 billion buy of eight Manhattan buildings in February, the Macklowes have been scaling back. When it was discovered that SL Green had a buyout option on 717 Fifth Avenue as part of that $7 billion portfolio buy, the Macklowes immediately backed out. Last week, they sold a highly valued site near the United Nations for $151.9 million.

And, according to a source, they’re mulling a plan to sell a few towers from their mega-portfolio buy.

Is it a matter of having their hands in too many projects? Is it difficulty finding financing? Or is it another well-calculated and shrewd move?

If there’s one thing the Macklowe family history tells us, it could be absolutely any of the above.