Harry and Leona Helmsley have been forced to give up one of their prominent New York office properties for the first time since the dramatic plunge in office building values in the late 1980s.
Unwilling to invest the money needed to attract tenants to the half-empty 34-story building at 22 Cortlandt St., the Helmsleys have given it up to their partner in the property, Metropolitan Life Insurance Co.
A Met Life spokeswoman, Catherine Peters, confirmed that now the insurance giant alone owns the prominent building, which used to house such tenants as the Wall Street Journal and AT&T. The building was constructed in 1971 by Harry Helmsley and investor David Baldwin, who later sold a 65 percent stake to Met Life.
“We parted on very amicable terms,” Peters said.
Like Helmsley, Baldwin has given up his share in the struggling building to the insurance company.
“I couldn’t see the light at the end of the tunnel,” he said. “I never thought things could get this bad.”
In giving up the building, the Helmsleys and Baldwin become the latest victim of downtown New York City’s persistently low rents and high vacancy.
What is surprising is that the Helmsleys would not hang on until the market turns around. Unlike other owners who have given up buildings, the Helmsleys are under no financial distress, thanks to their hotel and office building empire, which is valued at over $1 billion. They also were making sizable management and brokerage fees from running the property.
“It could become a winning property if someone put some money into it,” said a source familiar with the office tower.
Sources said the building, which was losing $3.5 million a year, needs an investment of more than $15 million to lease the 350,000 square feet of empty space. The money is needed to pay brokerage commissions and to give tenants interior construction work and other incentives.
Met Life was willing to invest this money but the Helmsleys, who owned 23 percent of the building, and Baldwin, who owned 12 percent, were not. As a result, they gave Met Life their shares in the building for nothing.
“At one point we could have sold the property for an enormous amount, but today it’s a whole other story,” Baldwin said.
As sole owner of the property, Met Life has launched a new marketing effort and hired a new leasing agent, Galbreath Co. The building is charging rents in the mid-$20-a-square-foot range and will build space worth $40 a square foot for tenants. Until now, the ownership has been unwilling to make such an effort.
Peters, of Met Life, said the insurance giant is eying the possibility of selling the building. The Helmsleys could not be reached for comment.
