NYC’s old office building shows how to succeed despite the trend toward shiny new towers

Let’s say you own a 60-year-old, nearly 900,000-square-foot office building in Midtown. Demand for space in mid-century buildings is weak. A half billion dollar mortgage payment is coming.

Do you:

Struggling to refinance when lenders are getting cold feet?

Complaining to the New York Times that it’s the worst season for property owners since the biblical floods?

If you’re Germany’s Munich Re, the world’s largest reinsurance company, you do neither. Just cash in and pay off the $500 million Wells Fargo loan in full – as it did with 330 Madison Ave. on East 42nd Street, sources told us.

The 850,000-square-foot tower across the street from One Vanderbilt is proof that buildings don’t need to be brand new to thrive. Its office floors are 98% let and storefronts are leased to Citibank, Santander and Swedish luxury men’s shirt maker Eton.

“It’s virtually unheard of for an owner to pay off such a large loan these days, but Munich Re doesn’t want to have debt on any of its buildings,” a source said. “When they got the loan, they had every intention of paying it back.”

The tower, which is managed by Munich Re’s asset management arm MEAG, represents the company’s “major entry” into the Manhattan real estate market, a source said.

Since buying the building for $900 million in 2020 just before the pandemic, Munich Re has signed 260,000 square meters of new office leases. Rents that were at $60-70 per sq ft three years ago are now over $100 psf, sources said.

The largest tenant is hedge fund and money manager Guggenheim, which owns the Los Angeles Dodgers, with 275,000 square feet. Other notable tenants include real estate brokerage JLL, Deutsche Bank AG, HSBC and Maverick Real Estate Partners, which relocated from 100 Park Ave. in 10,000 square feet at 330 Madison earlier this year.

The landlord made significant investments in the property and is creating a tenant-only terrace amenity on the 16th floor to include an outdoor event space with an enclosed terrace, a full-service bar and lounge seating. For good measure, 330 Madison sits atop an entrance at No. Grand Central Station stop with 7 lines.