The word “iconic” gets thrown around a lot when it comes to buildings. There are buildings scattered around the world that are recognizable parts of a city’s skyline. But few buildings are actually iconic enough to have garnered global recognition. One building that deserves that distinction is the Flatiron Building in Manhattan. The building’s thin, pie-shaped outline and its ornamental Beaux-Arts decorations have made it one of the most photographed, and therefore recognizable, buildings in the world. It’s so striking that the surrounding neighborhood is named after it, the Flatiron District.
The Flatiron Building rose to recognition as the Fuller Building when it was built in 1902, named after the developer and owner George A. Fuller. Fuller is known as “the father of the skyscraper” because he was one of the pioneers of using metal skeletons in buildings (rather than thick stone walls) for support. At the time, this technique was controversial as engineers doubted the reliability of this new metal alloy called steel. In fact, when the building was first built, it was dubbed “Fuller’s Folly” because many believed it would fall over due to its height and narrow base.
Of course, it did not fall over, and its design became a recipe for the tall buildings that modern cities are known for. Since then, the building has made cameos in tons of movies and TV shows like Godzilla, Sex and the City, I Am Legend, and was most recently used as the hideout for the protagonists of the hit superhero series The Boys.
The building was a sought-after office location for over a century. By 2004, its only tenant was the publishing company Macmillan. Controlling interest in the building was eventually sold in 2008 to an Italian investment firm the Sorgente Group who initially planned to turn it into a luxury hotel when Macmillan’s lease expired in 2015. At the time the building was estimated to be worth about $250 million. When the sole tenant left, the owners of the building decided to keep it an office. The executive director of the ownership company said at the time: “The building was born as a commercial property, and we want to keep it as such.”
To compete with newer offices in town, they decided to upgrade and renovate it, opening the interior up to one large floorplate per story and installing things like central air conditioning and heating, staircases, sprinklers, and new elevators. The cost of these renovations was priced at $60-80 million, but eventually, they became the building’s downfall. Some of the building’s owners wished to sell rather than pay for the renovation, which some claimed was unnecessarily expensive.
After much dispute, a New York Supreme Court judge ordered that the building be put up for public auction. This month that auction took place, and a bidding war ensued. The bidding hiked up until it finally reached $190 million, much more than most had anticipated. Valuing commercial buildings is always subjective, but valuing famous buildings like the Flatiron Building is even trickier. Unlike many office assets, the price of the Flatiron Building seemed to be driven by emotion rather than economics. The highest bidder, Jacob Garlick, said that owning it was “a lifelong dream of mine since I’m 14 years old.”
The Flatiron Building is no stranger to controversy (it was originally designed without women’s bathrooms because women were not expected to work in an office building of such importance), and the controversy has continued. Last week the new owner failed to make his 10 percent down payment, so everyone is left wondering what will happen next. But either way, the price that the building fetched shows that iconic buildings have an intrinsic value beyond their NOI and cap rates. Commercial real estate owners are usually very calculated when it comes to what they will pay for a property. Still, it turns out that for certain buildings, there is a premium to owning a piece of history.