Durst sells Third Avenue office space to counteract weak leasing market

The Durst Organization recently completed a “leasehold office condominium” transaction at 205 East 42^nd Street. Durst converted the building into an office condominium. They then leased 170,000 RSF condominium unit to theCity University of New York.  The purpose of the leasehold condo is to avoid paying real estate taxes. Since the space that CUNY, a non-profit, is leasing is its own tax lot and condo unit, and since the term of the lease is for 30+ years, there are no real estate taxes. The tax exemption enables Durst to rent the space to CUNY at approximately $10/RSF below market rate and still achieve the same net operating income. Other landlords have recently used this sophisticated technique to lure tenants, including SL Green’s lease to the MTA at 333 West 34^th Street. This transaction highlights one of the many benefits to office condominiums. Please contact us for more information on leasehold office condominiums.