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Piece of the Empire State Building Could Be Yours

The Malkin family is said to be planning to create a publicly traded real estate company featuring the Empire State Building.
Credit...Todd Heisler/The New York Times

People who have always wondered what it might be like to dabble in a little New York real estate may soon be able to dabble in a lot of it — by buying a piece of its most famous skyscraper, the Empire State Building.

The Malkin family, which controls the 102-story Art Deco tower at Fifth Avenue and 34th Street, is planning to create a publicly traded real estate company featuring the building, according to three executives who had been briefed on the plans but spoke on the condition of anonymity because they were not authorized to discuss the matter.

The skyscraper draws tens of thousands of tourists from across the globe every year to its 86th-floor observatory, 1,050 feet above the city streets. If the Malkin plan is successful, New Yorkers, and anyone else for that matter, will be able to buy stock in the company that owns the Empire State Building, much as Wisconsin residents bought stock in the Green Bay Packers.

The new company, the executives said, may include a number of other office buildings controlled by Anthony E. Malkin and his father, Peter L. Malkin, including 1 Grand Central, a 55-story, 1.3-million-square-foot building across 42nd Street from Grand Central Terminal, and a 26-story building at 250 West 57th Street, as well as six buildings in Westchester County and Connecticut.

Anthony Malkin declined to comment, but he, his father and their partners are hoping to cash in on the Empire State Building’s international cachet and a commercial real estate market in New York that is once again attracting buyers from around the world.

“Investors the world over are clamoring to invest in Manhattan office properties, both debt and equity,” said Michael Knott, a managing director of Green Street Advisors.

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The Empire State Building is at the center of a plan to create  a publicly traded company.Credit...Chester Higgins Jr./The New York Times

Still, the Malkins must clear a number of hurdles, not the least of which is gaining the support of their principal partner, the estate of Leona Helmsley, which has hired advisers to evaluate the proposal, and the 3,400 limited partners in the existing company that owns the Empire State Building.

A public sale would come amid a sharp rebound in the number of initial public offerings, which roughly tripled in the first quarter of 2011 compared with the same period a year ago. Stock offerings for real estate investment trusts have also surged, with a total volume of $1 billion, more than double the output during the same period last year. But Mr. Knott said that many of those recent offerings had not performed very well after selling in the public markets.

The Empire State Building did not get off to an auspicious start when it opened in 1931, during the Depression. Critics derided it as the “Empty State Building,” and it was not profitable until 1950.

Mr. Malkin’s grandfather Lawrence A. Wien, his father and Harry B. Helmsley created what became a model for real estate syndication when they bought control of the building in 1961 from Henry Crown and leased it to a group of investors, including themselves. Those investors then sold an operating sublease for the tower to another entity now controlled by the Malkins and the estate of Leona Helmsley, while Mr. Helmsley and Mr. Wien sold the title to the property to the Prudential Insurance Company.

After years of fighting among the owners and feuds with Donald J. Trump, the Malkins gained full control of the building about five years ago and embarked on what has become a $560 million effort to burnish the 2.9-million-square-foot landmark and more than double the rents.

They have renovated the lobby — restoring original Art Deco murals — refurbished the observatory and replaced the 6,514 windows as part of an effort to make it one of the city’s most energy-efficient buildings.

The Malkins and their brokers at Newmark Knight Frank have attracted a series of corporate tenants, including a division of Li & Fung, the giant trading firm, which signed a lease for 483,000 square feet in January. There are now about 200 tenants, down from 950 in 2002, though today’s tenants occupy far larger spaces. The building may never command rents as high as those at trophies like the General Motors Building, but real estate brokers say the tower now shines.

“They’ve moved the building, in my mind, to a Class A property,” said Peter Riguardi, president of Jones Lang LaSalle in New York. “It needed those upgrades. It’s now one of the top buildings in that area.”

A version of this article appears in print on  , Section A, Page 20 of the New York edition with the headline: This Art Deco Gem (Well, a Piece of It) Could Be Yours. Order Reprints | Today’s Paper | Subscribe

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