Empire State Building - For Sale! (The Bugle)

What is the most prime real estate on the planet? A list would no doubt include iconic buildings in the world’s leading cities, from London, to Hong Kong, to Dubai, to New York. If you have ever dreamt of owing a part of the world’s most desirable real estate offerings, now may be your chance. Hot of the press from the Wall Street Journal, is a report that the world famous and instantly recognizable Empire State Building is to be sold. This will be by means of an Initial Public Offering (IPO) by the stakeholders in the private company that owns the Empire State Building. More than 80% of the 2,800 stakeholders in the building eventually voted in favour of the deal, which has now paved the way for one of the largest real-estate IPO’s ever. The new proposed company, Empire State Realty Trust, aims to combine the iconic 1931 skyscraper with 18 other properties. This seems to be a clever way to sell other (possibly less prime) buildings by bundling them with such an iconic landmark as the Empire State Building. It does however also diversify the risk of the asset holding which investors would respond favorably to. The Malkin family have controlled the asset and have had a lengthy battle with dissident stakeholders who opposed the plan. The upside for a listed real estate asset is the fact that it becomes much more tradable. When you combine an iconic building with one of the world’s most vibrant cities, it becomes a very attractive proposition to want to go the IPO route. The demand for office rentals in New York has however been flat and with new office space coming on stream, older buildings will have to remain competitive in terms of rentals. Although some reports are claiming that the value of the IPO will be US$4,2bn  (ABC News), this remains to be seen.

The Empire State Building was the tallest building in the world when it was completed in 1931 and remained as such until the completion of the World Trade Centre in the early 1970’s. Today, at 381m and with 102 floors it is ranked only as the 22^nd tallest building in the world. The world’s tallest building is the impressive Burj Khalifa in Dubai, which measures 828m and has 163 stories. This building has set other world first records including the tallest free-standing structure in the world, the highest number of stories in the world, the highest occupied floor in the world and the elevator with the longest travel distance in the world. Luxury residential suites occupy floors 45 to 108, with office space taking up the remaining bulk. The very slick and newly completed One World Trade Centre in New York is now the world’s third tallest building at 541m and 104 floors.

(Author: Andreas Wassenaar, published in The Bugle, 5 June 2013)