Ground-up towers from Related, Silverstein and Tishman Speyer define the skyline. Some of the most interesting work in the market happens in older buildings instead. Value-add owners such as RXR, Vornado and Savanna, and operators such as the Kaufman Organization, the Zar family’s ZG Capital and Zar Property NY, buy underperforming, well-located buildings and reposition them into Class A-caliber property.
The approach skips the time, cost and entitlement risk of building from scratch. (For the new-construction side of the market, see the new towers raising the bar.) Three recent deals show how it works.
799 Broadway: amenities reset the rents
Savanna acquired 799 Broadway, a boutique Class A building just off Union Square, in late 2024. The ±175,000 RSF asset sold for $255 million, about $1,444 per square foot and well below replacement cost. It was roughly 70% occupied, anchored by Wellington Management’s 71,000 SF lease on a 16.5-year term.
Savanna moved quickly on a curated amenity package: a high-end fitness center, a tenant lounge, landscaped terraces, and wellness systems such as MERV-13 filtration, UV sanitization and touchless access.
That is the value-add thesis in one building: buy quality real estate at a sensible basis, activate underused space, and meet demand for hospitality-style workplaces. It is the flight to quality seen from the owner’s side.
37 East 18th Street: a boutique repositioning
Zar Property NY bought 37 East 18th Street, a ±77,500 RSF building in the heart of Flatiron, in August 2024 for $27 million, or $403 per RSF. It was only 42% occupied at closing, which left wide room to add value through prebuilt floors, an activated rooftop and a lobby overhaul, with a residential conversion as an option.
Zar brought in BKSK Architects for a top-down repositioning: lobby and elevator modernization, turnkey prebuilt floors, more efficient layouts and a dual-zone rooftop split between private tenant use and shared amenity space. It is not a glass-box tower like 799 Broadway. In a submarket with vanishing supply and strong appetite for turnkey creative space, it doesn’t need to be. In high-demand submarkets, well-executed space leases at or near ask.
135 West 29th Street: value-add on a ground lease
In early 2021, the Kaufman Organization signed a 99-year ground lease on the Haymarket Building, about 81,000 RSF just off what is now called Unicorn Lane. The $34.5 million deal, roughly $486 per RSF, was an assertive move mid-pandemic. The building was 70% leased, with about 25,000 SF of upside and steady cash flow from creative, apparel and tech tenants.
The plan, led by NV Design Architecture, is close to what Zar is now doing on East 18th. Kaufman recaptured ground-floor retail to expand the lobby, upgraded the common areas, modernized elevators and mechanical systems, added 24/7 attended service and delivered prebuilt suites with its signature wet pantry. The last piece was a rooftop terrace, split between building-wide access and a private section for the penthouse tenant. Kaufman has run the same playbook from One NoMad to 45 West 27th Street.
Asking rents rose from the mid-$30s per square foot to the mid-$50s, with upper floors in the mid-$60s. In about two years the building went from a mid-pandemic gamble to nearly full, with one floor remaining and three-year minimum terms across the board, even with a tenant base of high-growth startups.
Design sells, rooftops lease.
What these deals have in common
None of these owners built the newest or tallest tower. They bought well-located buildings at a sensible basis and invested in the experience, from the lobby to the roof. That is the product many growing teams now want, including companies leaving coworking. Extend, an AI document intelligence company, moved out of coworking and into a built-out NoMad office in five weeks.
The market is chasing experience, not square footage, and value-add owners have been rewarded for it with higher rents and faster lease-up. Expect the pricing in these buildings to reflect the upgrades.