TOKYO -- Japanese property developer Mitsui Fudosan is building a 58-floor office building in the heart of New York as part of a local partnership.
The company will hold a roughly 90% stake in the project, which is expected to cost more than 400 billion yen ($3.62 billion). With a total floor space of about 260,000 sq. meters, the building will be one of the largest in Manhattan, and the Tokyo-based builder's biggest in the world. It is slated for completion in 2022.
Asset management company BlackRock has already signed up as a tenant. Mitsui Fudosan also aims to set up commercial space inside the building, using its past experience with similar facilities in Japan.
Some believe the U.S. is in the midst of a property bubble. But the developer decided that investing in New York, where office space is limited and rents are expected to remain stable, was a safe choice.
The new building will be located in Hudson Yards, which was picked as the site of the main stadium in New York's bid to host the 2012 Summer Olympics. After that effort failed, the city has provided incentives to attract private investment to the area. Mitsui Fudosan is building another 51-floor high-rise there to be completed next year. It has already found tenants for 80% of the space at higher-than-expected rents.
Construction of new buildings plummeted in Manhattan after zoning changes in the 1980s. Only about 200,000 sq. meters of new office space are added on average each year. Mitsui Fudosan expects a more stable stream of rental income there than in Tokyo.
The company said it will invest 550 billion yen overseas in the three years through March 2018, but the actual figure is expected to come out closer to 570 billion yen.