A Mexican banking scion and art collector has four months to decide if he wants to hang on to an Art Deco masterpiece, a 59-story office tower overlooking Bryant Park.
Moisés Cosío Espinosa lost his father as a teenager, and his inheritance included 500 Fifth Ave., a soaring 700,000-square-foot tower developed in 1931 by the same architect as the Empire State Building. The building had been acquired for $132 million in 1996, when Cosío was 12. Now Cosío has four months to decide if he wants to keep the building, which has a nearly 20% vacancy rate and needs millions of dollars worth of work.
Lenders have told Cosío they’ll extend the property’s $200 million mortgage by two years on the condition that he invest $10.6 million in the building by April, according to a report yesterday from credit-rating agency KBRA. It isn’t clear if the 3.6% interest rate attached to the loan would be extended as well, because the loan came due last October.
Cosío, whose grandfather co-owned two of Mexico’s biggest banks, can surely come up with the cash. In addition to collecting contemporary art, he is a movie producer with credits including the horror film We Have the Flesh, which Variety described as an “extreme Mexican fiesta of incest, cannibalism and explicit sex that should earn detractors and fans in equal measure.” An email to Cosío’s art foundation, Fundacion M, wasn’t returned.
The question for Cosío is whether 500 Fifth is worth keeping anymore because it requires a lot of attention.
“It needs massive investment in order to stay competitive,” said Ruth Colp-Haber, chief executive of Wharton Property Advisors. “Massive renovation and upgrades.”
A decade ago Cosío invested $17 million in renovations, KBRA said, but earmarked only $1 million for that purpose when he refinanced the mortgage in 2015 and extracted a $74 million dividend from the property. The building has lost more than half its value since then and was appraised last year at $275 million.
The building is one of several Midtown towers of a certain age wrestling with the noxious combination of falling cash flow and rising vacancies. The Helmsley Building, developed in 1929, went into foreclosure after vacancies soared to 30%. At the Chrysler Building, developed in 1931, operator RFR Holding defaulted on $21 million in rent to landlord Cooper Union and was ordered by a judge to leave.
New office space is tough to find, but tenants have lots of choices when it comes to all the other kinds. Manhattan’s office vacancy at the end of 2024 was 23.3%, up from 22.8% the previous year, Cushman & Wakefield says. The average asking rent across all buildings edged down to $72.73 a square foot from $73.33 in 2023.
The tower at 500 Fifth has an unbeatable location at the corner of West 42nd Street, across from the New York Public Library and a short walk from Grand Central Terminal. Its top tenant is publisher W.W. Norton, and the building produces more than twice the cash needed to service debt. Cosío may find a partner to help shoulder the cost of renovations, much as Canadian pension fund CDPQ did last week when it sold a 49% stake in 1211 Sixth Ave. to RXR Realty, which pledged to invest $300 million in upgrades.
Going this route could force Cosío to take a substantial loss. The value of 1211 Sixth was marked down by 33%, to $1.2 billion, when RXR agreed to buy the property.
