C
ooper Union has emerged victorious in its battle with Aby Rosen, securing control of the Chrysler Building's leasehold after a Manhattan Supreme Court judge ruled against Rosen. However, the school now faces the daunting task of bringing the iconic skyscraper into the 21st century.

    "We're evaluating alternatives for the future of this landmark," said David Heller, senior managing director at Savills Capital Markets Group, which is advising Cooper Union on its real estate strategy. "We understand that significant capital investment will be required."

    Rosen's RFR had held the leasehold since 2019 but was ousted by Cooper Union over his failure to pay $21 million in ground rent. The school has been exploring options for the building, including seeking a new developer to take over the leasehold.

    Heller acknowledged that finding a suitable replacement will be challenging, citing the building's aging infrastructure and awkward floor layouts as major drawbacks. The annual ground rent has skyrocketed from $7.75 million in 2018 to $31.5 million this year, with plans to increase to $41 million by 2028.

    Rosen had invested $170 million in physical improvements but was unable to stem the tide of pandemic-era tenant departures. Despite its prime location near Grand Central, the building remains 40% vacant, and its Art Deco lobby is in need of restoration.

    Savills is considering various strategies, including seeking historic-property tax credits from federal and state governments, as was done for the Moynihan Station project. Heller noted that while these credits may not be available, they are part of the school's due diligence process.

    Ultimately, Cooper Union aims to reposition the Chrysler Building to attract high-end tenants willing to pay top dollar – potentially upwards of $150 per square foot in the upper floors. However, with the current market conditions, achieving such rents will be a significant challenge.