WSJ
October 8, 2009, 1:12 PM ET
AIG Headquarters: From Cubicles to Condos
Battered insurer American International Group Inc.’s former New York headquarters might be going condo, replacing cubicles and copy machines with granite countertops and imported tile.
Developer Young Woo, who snapped up 70 Pine St. in Manhattan’s Financial district earlier this year, is considering turning the 66-story tower into a hybrid with commercial space on the lower levels and the higher floors becoming condominiums. The residential units, he says, could command $2,000 per square foot, according to The Real Deal.
The key to getting that sky-high price is to market the Depression-era Art-Deco building as a premium product, says Mr. Woo, principal of Youngwoo & Associates.
Of course, numerous developers across Manhattan have tried that exact strategy, only to see prices and demand crumble along with the economy. Higher jumbo mortgage rates and job losses on Wall Street have hit the luxury market particularly hard: The average price per square foot for luxury condos in Manhattan tumbled 21% from a year ago to $1,840, according to the Corcoran Group and PropertyShark.com’s third-quarter report.
Still, it will take some time for Mr. Woo’s potential condo conversion. Permits and inevitable construction delays aside, AIG can stick around Pine Street until Dec. 31, 2010, the Real Deal reported. The Big Apple’s market could show glimmers of life by then.
In a research note, Fox-Pitt Kelton analyst Rob Stevenson writes that the $2,000-per-square foot could apply only to the top floors, which would offer sweeping views of lower Manhattan. Even so, the project could be lucrative, he says.
“Any selling price north of $1,000 per square foot would drive more than $500 per square foot of pure profits (after selling costs) according to our educated ‘guestimates,’” he says.
That’d represent a handsome return on the roughly $105 per square foot, or $150 million, Youngwoo and financial partner South Korea’s Kumho Investment Bank reportedly paid for 70 Pine and nearby 72 Wall St. AIG, which the government bailed out to prevent its collapse, has been unloading property worldwide. During better times – ones where the recession doesn’t spark a fire sale – the Pine Street address could have fetched much more.
http://blogs.wsj.com/developments/20...les-to-condos/