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New York Agrees to Sell Two Buildings for $249 Million

The city of New York agreed to sell two lower Manhattan buildings for a combined $249 million as part of an effort to reduce government office space and lower operating expenses.

The buyers are Peebles Corp., which will pay $160 million for 346 Broadway, and Chetrit Group, which is acquiring 49-51 Chambers St. for $89 million, Mayor Michael Bloomberg’s office said in a statement today. The deals require the approval of the Manhattan Borough Board, led by President Scott Stringer. Both properties are city landmarks, meaning they can’t be altered without government approval.

“In 2010, we set a goal of reducing city agency office space by 10 percent within four years,” the mayor said in the statement. “Today’s agreement brings us more than 80 percent towards that goal.”

At almost 600,000 square feet (55,700 square meters) combined, the deals value the buildings at about $415 a square foot. That compares with an average value of $362 a square foot on downtown commercial buildings sold last year, a 48 percent increase from 2011, according to data from Real Capital Analytics Inc., a New York-based research firm that tracks commercial-property sales.

The buyers plan to redevelop the properties, which house city agencies, for hotel, residential, retail and community uses, according to the statement. Coral Gables, Florida-based Peebles agreed to set aside space at 346 Broadway for a 16,000-square-foot digital-arts and media community center. The building, constructed in the 1890s, is the former home of New York Life Insurance Co.

The sales “will continue the revitalization of lower Manhattan,” the mayor said.

Cost Savings

City officials expect the sales to generate $120 million in net revenue after the costs of relocating city agencies and creation of the media space. The transactions also will save another $120 million in operating expenses over the next 20 years, the mayor said at a news conference today at 49-51 Chambers, the former Emigrant Industrial Savings Bank building.

New York-based Chetrit, which in January agreed to buy the Sony Building in Midtown, plans to convert 49-51 Chambers into a residential and retail building. About 30 percent of that building is currently used as storage, which the mayor’s office called “an inefficient use of valuable real estate.”

The mayor is founder and majority owner of Bloomberg LP, parent company of Bloomberg News.

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