When 545 Madison Avenue reopens in May 2008 in New York City, it won't at all resemble the original model. For starters, the 17-story office building will sport a crystal-clear façade, with 9-foot glass panels replacing the original blonde brick from 1955.

The landmark sits on the site of the home of Elihu Root, 1912 Nobel Peace Prize winner and former U.S. Secretary of State. It was developed by Emery Roth, a Hungarian-American architect, whose firm built more than 175 buildings in New York in the 1890s.

By 2006, the 50-year-old property was showing signs of wear. Despite the prime location at the corner of Madison Avenue and 55th Street in Midtown, the building was collecting among the cheapest rents in the Plaza District. Tenants weren't interested in the property, but it offered just the kind of value-adding opportunity LCOR Inc. sought.

Late last year, the East Coast developer signed a 75-year ground lease for the building from Marx Realty & Improvement Co. LCOR is the developer behind 101 Hudson Street — New Jersey's tallest office building — and the $1.4 billion Terminal 4 at JFK International Airport.

“Other bidders were looking to do modest renovations,” says David Sigman, senior vice president of LCOR. “Our view of the market was to take it to Class A-plus and seek top rents.”

Backed by Lehman Bros. and BlackRock, LCOR is now giving 545 Madison Avenue a $50 million renovation. The building is being gutted, and will be fitted with new elevators, electrical and mechanical systems and a glass exterior. New York's Moed de Armas & Shannon is overseeing design. Jones Lang LaSalle has been tapped to lease the office space; CB Richard Ellis Inc. is marketing about 7,000 sq. ft. of ground-floor retail.

The company also is planning amenities, such as concierge services, and seeking gold-level LEED certification — a decision it made when it found itself in the running for a lease from Al Gore's Generation Investments Management LLP. Though that deal went to another property, Sigman says going green is a differentiator that many tenants are using to justify paying higher rents.

LCOR is pursuing boutique-type tenants, especially financial or law firms interested in a full 4,900 to 9,300 sq. ft. swath of space or 1,000 sq. ft. penthouse. Nearby, office buildings along Park Avenue and 57th Street are collecting rents as high as $200 to $225 per sq. ft., Sigman says. “Because we don't have the height or the views of Central Park, we're looking for the low $100s at the base of the building and up to the mid-$100s at the top.”

He says early interest in 545 Madison Avenue is strong, with hedge funds in particular being drawn to the property's lease rates and small floorplates. “With the collapse of the subprime market, there's a lot of talk about its impact on the hedge funds, but that's still the bulk of who we're talking to,” Sigman says. “They still have a business to run. Hedge funds are here to stay, and New York is still the center of things.”