Photo: Courtesy Fotografiska
It was two years ago that 281 Park Avenue South, the six-story Flemish Renaissance building that brought down scammer Anna Delvey, went on the market for $135 million — a steep asking price, but maybe just possible if you squinted. Interest rates were still relatively low, and the building had a trophy tenant, Swedish photography museum Fotografiska, with a 15-year lease.
Except the building didn’t sell, and earlier this month Fotografiska announced it was leaving less than halfway into its lease. Crain’s reported the building would be listed again, though it’s now tenantless in a far less favorable market for selling commercial real estate. When I reached out to the owner, Aby Rosen’s RFR, the company had nothing but nice things to say about Fotografiska and added that it is “excited to bring this architectural gem back to the market for lease or sale and believe it is more valuable now as a blank canvas for a new user.” The listing hasn’t been circulated publicly, but it’s not exactly a whisper listing, either. A commercial-real-estate broker I spoke with told me RFR has been shopping it around for $140 million, an amount the broker found “asinine — just plain old stupid.”
The restaurant, Veronika, was a hit, but the verticality of the building and the limited exhibition space were issues for Fotografiska.
Photo: Courtesy Fotografiska
“I’m not convinced it’s even worth what Aby paid for it,” says another broker. RFR bought the building in 2014, for $50 million, from its longtime nonprofit owner, the Federation of Protestant Welfare Agencies. The firm then poured another $30 to $40 million into the renovation, an ultrahigh-end affair overseen by Roman and Williams and CetraRuddy that involved “essentially building a building within a building,” according to one person I spoke with. It is, by all accounts, a stunning space, with a very popular restaurant, Veronika, on the second floor, an events space on the top floor, and a private-club bar in an adjacent chapel (all run by Fotografiska). But it was not, apparently, well suited to its sole tenant, who will be shutting it down on September 29.
The galleries, in the middle floors, did not have the same soaring ceiling heights as the restaurant and Chapel Bar.
Photo: Courtesy Fotografiska
The problem, it seems, is the exhibition space, which is spread across the middle three floors of the building. Fotografiska’s executive-board chairman, Yoram Roth, told Artnet that the 42,000-square-foot building has only about 7,600 square feet of exhibition space and the walls are just nine feet high, limiting the kinds of shows that can travel there. (The museum’s other locations have at least 12,000 square feet of exhibition space and 12-foot-high walls.) “The space constraints, especially the low ceilings … are not conducive to exhibiting video works,” artist Shirin Neshat told the publication. Someone else I spoke with said the exhibition space is less problematic than the verticality: “Ideally, it should have been a more fluid space, but having everything spread out over six different floors balkanized it. The restaurant was separated from the exhibition space, and that was separated from the event space.”
The Chapel Bar, in a renovated chapel adjacent to the main building.
Photo: Courtesy Fotografiska
A broker who has done other deals in the area points out that Park Avenue South doesn’t get great foot traffic, which is crucial for a museum that opened right before the pandemic. And though the building has often been described as 45,000 square feet, commercial-real-estate math means the usable square footage is probably considerably less — about 35,000 square feet above grade, several brokers told me. It’s on an 80-by-70 lot, so that’s 5,600 per floor, with a cutout on the back, one pointed out, and other carveouts for elevators and stairs. None of that is bad, exactly, but it does limit the usage somewhat and makes the price even more eye-popping.
No one I spoke with thought it could get even $100 million right now, let alone $140 million. The Breuer building, a trophy property in a great location, sold a year ago for $100 million and it’s 77,000 square feet. “It’s the classic, ‘It didn’t sell, let’s ask for more,’” says Jonathan Miller, CEO of the appraisal firm Miller Samuel. “I can’t speak to this particular building, but the commercial-real-estate market has seen, across many property types, a sharp correction in values. And that is in many ways an understatement.”
“He’s asking $3,294 per square foot. If you look at other prime trophy buildings that sold recently, they’re trading for $500 or $600 per square foot,” says Adelaide Polsinelli, a commercial broker at Compass. She pointed out that in 2021, a much better time to be off-loading trophies, she sold 604 Fifth Avenue for $56.4 million, which works out to $2,500 per square foot. And that was in the Plaza District, the most expensive retail strip in the city. Compare that to 281 Park, which one broker described to me as being in what is, “in many ways, one of the coolest locations in the city” but far from its priciest. “If it’s on Fifth Avenue, then it’s worth $140 million. But it’s not,” they said. “There’s no universe in which this building is worth $140 million.”
Maybe Rosen will find someone who wants it so badly they just don’t care. “Users” — that is, companies buying properties for their own use versus real-estate companies looking to turn a profit off them — “have become unicorn buyers in today’s investment sales market,” says Erik Edeen, a principal at Avison Young, “paying top dollar and stretching beyond where investors can make returns pencil.” They’re overpaying, in other words, as Gucci arguably did when it paid nearly $1 billion for a prime Fifth Avenue retail property. But again, Fifth Avenue.
“Not even Anna’s paying that kind of money!” another broker said. The building “has some pedigree, but no one is paying for pedigree right now. Everyone is looking for distress, distress, distress.” It’s more likely that RFR will find a new tenant, which should do well enough for now; Fotografiska was said to be paying $100 per square foot. Another museum, a foundation, maybe some kind of luxury retail concept. Private clubs are clearly having a moment — it would make a nice home for one. “A tenant will come along who wants it,” says a broker, though the pre-COVID rent may be a stretch these days. “I could rent it tomorrow for $75 or $80 per square foot.”
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