Spurred by the weak dollar and the strong euro, European travelers to the U.S. have been lapping up everything from Gap boxers to iPhones to luxury condos in Palm Beach, Fla. Now a top Italian real estate investor has nabbed one of the crowns of New York City property, a sale that echoes the Japanese purchase of Rockefeller Center in 1989. Valter Mainetti has confirmed to TIME that his company, the Sorgente Group, has acquired a majority share in Manhattan's historic Flatiron Building.
Among the first and at the time tallest of New York City's signature skyscrapers when it was completed in 1902, the 22-story Flatiron, at the intersection of Fifth Avenue, Broadway and 23rd Street, is instantly recognizable for its triangular shape. Though it was dwarfed 30 years later by the Empire State Building, 11 blocks up Fifth Avenue, the Flatiron is a favorite of architecture buffs and a lasting star in the skyline, featured in the opening credits of the Late Show with David Letterman and serving as the fictional headquarters for the Daily Bugle in the recent Spider-Man movies. It has been a National Historic Landmark since 1989. Though the purchase is not quite as much of a shock as the Mitsubishi Group buying Rockefeller Center, the Flatiron's falling into foreign hands nevertheless carries symbolic weight and shows international investors taking advantage of the upheaval in the real estate market and the weakness of the U.S. dollar. The euro closed Monday at $1.56.
As bad as the U.S. housing bust has been, the falloff in sales has been cushioned by foreign buyers in such places as New York City and Florida. Anne Marie Moriarty, a vice president of Corcoran realtors, says residential real estate sales to foreigners have doubled in the past 15 months. The uptick in foreign interest helps explain why New York City real estate prices are up 11% over last year in an otherwise tanking marketplace. "It's bucking the trend," says Moriarty of the Manhattan market. Foreigners "see it as a long-term investment. Part of it for them is owning a piece of New York."
Similar thinking is behind Mainetti's purchase. He has been building his Michelangelo Fund around investments in so-called trophy properties, which have historical or architectural value beyond the typical calculation of location and square footage. In 2005, he bought a 27% stake in the company that owns the Chrysler Building. A year later he acquired a minority share in the Flatiron, which today is valued at a total of $180 million. With the latest deal, he holds a 53% share of the famous building. "The Flatiron is expensive, but with the [cheap] dollar, it made sense to increase our share," says Mainetti. "The stability of the New York real estate market is unique. This current crisis will pass, and the dollar will re-establish itself. We are confident."
Foreign companies were the buyers in four of the top 13 U.S. commercial real estate deals in 2007, according to Real Estate Alert newsletter. Another foreign acquisition of notable Manhattan real estate was the Dubai-based Jumeirah group's 2006 purchase of the Essex House on Central Park South.
Michael Seton, a managing director in the New York office of German-based property lender Eurohypo AG, said foreigners view the U.S. market as a long-term investment. "They're less rattled by the subprime crisis and short-term gyrations in the market," Seton explains. "Their horizon is longer, which in the end is good for the real estate business. These are properties that are meant to be held onto." The new Italian owners of the Flatiron say they're in for the long haul and plan to seek city approval for a new project to illuminate the exterior by Vittorio Storaro, the Oscar-winning director of photography for Apocalypse Now and Little Buddha. Just a touch more glamour, perhaps, for the real-life publishing-company employees who occupy its offices not to mention Peter Parker and his Daily Bugle colleagues.