470 Vanderbilt office building, across Atlantic Ave. from Atlantic Yards site (and once contemplated for AY housing), sold again, this time for a big loss

2014 ad

Nearly 11 years ago, in October 2014, I reported (link) on the "spiffy future" of the 470 Vanderbilt office building--a former tire plant and then data center--at the northwest corner of Atlantic and Vanderbilt avenues, across from the northeast corner of the Atlantic Yards/Pacific Park site.

"470 Vanderbilt Avenue," new leaseholder RXR Realty said in the ad, "is a Class A office building prominently situated on a 3-acre, full city block bounded by Atlantic Avenue and Fulton Street."

"Just minutes away from the Barclays Center and the Atlantic Yards Development, 470 Vanderbilt has recently undergone a $74 million dollar capital improvement program transforming it into one of the most state-of-the-art assets in this emerging neighborhood," the ad said, otherwise identifying it as "in the emerging Atlantic Yards neighborhood."

(Technically, it's the edge of Fort Greene, near the border of Clinton Hill. But it's also across Atlantic Avenue from Prospect Heights.) 

Well, it didn't quite work out. The Atlantic Yards railyard towers, which presumably might have goosed demand for the building's remaining retail space, didn't open.

Doing the math 

And RXR apparently recognized that, despite having steady office tenants in the New York City Department of Human Resources and the New York City Housing Authority, the building wasn't the best use of its capital. 

The Real Deal reported, "A source close to the transaction noted that RXR viewed the asset in the 'film' category, not up to the standard of the 'digital' assets the company prizes."

That said, RXR in 2016--after the 470 Vanderbilt deal--acquired from the same owner the adjacent parcel to the north, known as 810 Fulton Street, for $29.6 million. It has since built a 363 unit building, with 73 below-market apartments, surely reaping a reasonable profit, even if that's counterbalanced by the bath it took on 470 Vanderbilt.

The history

RXR acquired the 470 Vanderbilt lease in 2014 for slightly under $195 million, the Real Deal reported, but sold the remainder, with 60 years left, for about $70 million. And that's not counting the money put up for renovation.

The Commercial Observer reported that the deal was $69.6 million, with Lincoln Property Company and Cross Ocean Partners the new owners.

“This property is a case study in downside-protected, opportunistic investment in today’s office market, and we’re excited to build on our momentum in this sector," said Terence Kim of Cross Ocean, which apparently translates as "a low price means a decent deal."

The AY tease 

The 650,000 square foot, 10-story building was once, in 2004, contemplated as potentially part of the Atlantic Yards plan, with additional square footage on top. 

It's unclear how far that went, but, if wide Flatbush Avenue between the arena block and Site 5 gives a lie to the claimed "neighborhood," similarly wide Atlantic Avenue at Vanderbilt would have compounded that.