M
organ Stanley is considering selling its 11-story office building located at 500 Park Avenue, which has a total of 200,000 square feet of space. The company is hoping to fetch a price of $125 million for the property, which was originally developed in 1960 as the headquarters of Pepsi-Cola. The lower floors of the building are dedicated to office space, while the upper floors contain 56 residential condominiums.

    The newly listed office property is being marketed as a value-add opportunity for potential buyers. By upgrading the lobby and adding amenities, a new owner could potentially increase rents on expiring leases to the Plaza District market rate of around $120 per square foot.

    Morgan Stanley's decision to sell the office building is part of a broader strategy to focus on other areas such as warehouses and residential properties. Lauren Hochfelder, co-CEO of the bank's $53 billion real estate group, explained during a recent interview that the company has been moving away from office investments due to their capital-intensive nature.

    The sales process for the 500 Park Avenue property is being handled by a team from Newmark led by Adam Spies and Marcella Fasulo. The building currently has a high occupancy rate of 95 percent, with tenants including SLR Capital Partners, Georgetown Company, and Friedland Properties. In fact, fashion designer Vera Wang recently signed a lease for nearly 27,000 square feet of space in the building.

    While Morgan Stanley considers selling its office building, the company is also exploring other opportunities in the real estate market. One such opportunity is the San Antonio mall that the company acquired for $100 million in 2021 after Simon Property defaulted on its loan. The mall has been renovated in 2019, making it an attractive prospect for potential buyers.

    The decision to sell these properties reflects a broader trend in the real estate market, as investors seek out more profitable opportunities in areas such as warehouses and residential properties. The shift away from office investments has been exacerbated by years of poor returns, creating a "lost decade" for the sector. However, other areas of the market, such as retail, are experiencing a surge in demand, with "value-add" shopping malls attracting significant interest from potential buyers.