Cooper Union, the esteemed New York City university, has emerged victorious in a legal dispute over the iconic Chrysler Building. The institution successfully ousted the real estate company R&S Chrysler LLC from the leasehold of the landmark after they failed to pay over $21 million in rent, as reported by Gothamist. Amidst accusations of financial struggle due to the COVID-19 pandemic effects, R&S Chrysler's efforts to renegotiate the lease terms were turned down by Cooper Union.
With the court ruling in their favor, Cooper Union now faces the challenge of managing the 77-floor building. According to Ruth Colp-Haber, President and CEO of Wharton Property Advisors, the prospective landlord must deal with various hurdles, including compliance with building codes, upgrades to aging infrastructure, such as leaky windows and old pipes, and potentially awkward space layouts. "It's a massive job," Colp-Haber told Gothamist, citing the necessity for "constant upgrades."
The future of the skyscraper remains uncertain despite the legal win, as detailed by the New York Post. Savills Capital Markets Group senior managing director David Heller expressed concerns about the school's ability to manage such a property. "I think we can all agree that operating a Chrysler Building is not the school’s forte,” Heller said, emphasizing the need for significant capital investment for renovations and updates.
Former leaseholder Aby Rosen, who took over the lease from Tishman Speyer in 2019, had poured $170 million into the building, but this effort was insufficient to prevent a decline in tenancy during the pandemic years. "Whatever Rosen's failings might have been, he's an experienced real estate developer with the know-how needed to restore and update a classic property," according to the New York Post article.
Cooper Union’s new responsibilities include collaborating with Cushman & Wakefield and Savills to strategize the long-term future of the Chrysler Building. Despite hurdles such as the building’s 40% vacancy rate and the impending rise in annual ground rent, potential partnerships have expressed interest in joining the project. Cooper Union intends to explore all options, including structural changes and partnerships, to enhance its value. The possibility of seeking historic-property tax credits to assist in financing the project has also been mentioned as part of the due diligence process. "We’re making sure everyone understands the options," Heller stated to the New York Post, as part of a forward-looking approach to repositioning the building and maximizing its potential.
