A tiny but renowned New York City institution of higher learning is caught up in a heated real estate battle regarding the iconic Chrysler Building.
The History
The New York Times and other publications recently highlighted the fight between Cooper Union, a private college that owns the ground under the famed New York City landmark, and Sigma Holding and RFR Holding, the two companies that purchased the skyscraper in 2019. As part of the lease agreement, the corporate entities agreed to pay Cooper Union to use the building and sublease office space.
However, the establishments lagged on said rent. Court filings document that this past July, the academic institution gave the owners a 30-day warning period regarding the $8.6 million plus interest they stand in arrears. Cooper Union entered into eviction proceedings in September when the debt was unsatisfied.
RFR countered by suing Cooper Union, alleging that the school had not followed proper eviction proceedings. As of October 31, the New York State Supreme Court had evicted RFR.
Real estate experts maintain that these disputes are not all that unique in Manhattan, where ground leases are common. However, this case is unique because the college owns land beneath the building and relies heavily on it to meet its business model.
About Cooper Union
The college was founded in 1859 by Peter Cooper, an inventor and philanthropist committed to educating people from working-class backgrounds. Cooper’s goal struck a chord with famed industrialist Andrew Carnegie, who purchased the land where the school now sits and gifted it to the college in 1902.
Other higher learning institutions across the nation possess unusual assets, but in most cases, said buildings were donated in the hope that they would contribute to the school’s mission.
Cooper Union has struggled to meet its mandate even with the Chrysler Building as an asset. For a significant amount of time, it offered its students free tuition. However, in 2013, the administration began levying tuition charges to satisfy its considerable budget deficits.
Under new leadership in 2018, the university experienced a change of heart and announced it would once again attempt to offer free tuition by 2028. This fall, administrators took the initial step towards meeting the 2028 mandate by providing students with a free senior year.
Cooper Union spokesperson Kim Newman said that the Chrysler Building conflict has not adversely impacted said aims because the establishment factored in safeguards for circumstances like lease termination and boosted its revenue and surpluses over the last several years through efforts such as fundraising and expense management.
“Our financial position is strong,” she said. “Since 2018, Cooper has met or exceeded its financial targets, generating incredibly positive fundraising momentum, which allowed us to build important reserves and surpluses.”
The Future
No one knows precisely what the Chrysler Building’s future will be. Since the Covoid pandemic, the structure has housed fewer and fewer tenants and fallen into a state of disrepair. Individuals close to the situation claim that Cooper Union has committed itself to identifying viable solutions to address the problem and heightening the landmark’s value once the existing legal issues are resolved.
According to the New York Times, the price of the ground lease rose from $7.75 million in 2018 to its current $32.5 million value. Cooper Union’s operating budget during the 2023 fiscal year stood at $147 million.
Mark DeFusco, a senior consultant at Higher Ed Consolidation Solutions, said that such figures confirm just how valuable the Chrysler Building is to Cooper Union and that the academic institution is not likely to sell it anytime soon.
