In 2010, the retail condominium at the base of 40 Mercer St. — with another address at 465 Broadway — was sold for $41.9 million. In July 2012, the same unit sold for $57 million. One year later, it sold again — for $80 million.
At the Real Estate Board of New York luncheon in November, moderator Mary Ann Tighe, chair of CBRE, reminded the crowd that Woody Heller and Will Silverman of Studley had been the brokers on all three occasions.
Heller said, “During the three-year period when we transacted this three times, none of the stores changed, but cap rates compressed and went down … that suggests the island can get taller but it doesn’t get wider so the supply is finite and that is the subtext.”
Retail condominiums such as the one that keeps trading in SoHo continue to be a focus of investor interest. As always, office buildings are limited commodities that generate multiple bidders but this year, a gaggle of downtown properties have come to market, sparking numerous trades. William Macklowe, who heads his eponymous company, recently agreed to buy 156 William St. for $62.5 million, or $250 per foot, through Douglas Harmon and Adam Spies at Eastdil Secured. The duo is also marketing 110 William St., a one-million-square-foot building.
Other downtown buildings are also going like hotcakes. These include 90 Broad St., for $126 million, or $315 per foot, through Eastdil; East End Capital and GreenOak purchased 123 William St. for $133 million, or $233 per foot; and 100 William St. was sold to Manulife for about $170 million, or $437 per foot, through CBRE. Additionally, JP Morgan Chase hired CBRE to sell the giant 2.2-million-square-foot One Chase Manhattan Plaza. That building is now in contract to the Chinese company Fosun Group for $725 million, or $325 per foot.
Among the Manhattan stalwarts also competing for downtown and Financial District buildings is Kent Swig of Swig Equities, who years ago coined the term “FiDi” for the area where he first purchased 48 Wall St. in 1998. “I have been bullish and plan on continuing to be bullish on downtown,” Swig said. “The fundamental difference is that FiDi is an extraordinary investment opportunity. All the infrastructure and opportunities are a reality today, as opposed to a future reality.”
Brookfield Office Properties closed in November on its $200 million purchase of the NYMEX building at 1 North End Ave. in Battery Park City, near its Brookfield Place complex, through Newmark Grubb Knight Frank. The deal includes a leaseback of some of the space, as well as adding a floor. Similarly, Cushman & Wakefield marketed Rockrose’s 324-unit rental at 22 River Terrace in Battery Park City for conversion. It was purchased by Centurion Real Estate Partners and Five Mile Capital in October for $255 million.
“My overall sense is that there is notably less product on the market now than during the rest of the year,” said Nat Rockett of C&W. Rockett expects brokers to be chosen soon by several sellers so they can launch the sales process early next year for the properties. “Stats will show it was a great year,” he added of 2013.
Other sales through C&W in the area include the St. John’s University site at 101 Murray St. to Steve Witkoff, the Fisher Bros. and Howard Lorber for a towering luxury condominium project, and the trade for the top of Verizon’s office building at 140 West St. to Ben Shaoul of Magnum Real Estate later this month for $274 million.
In an uptown transaction, CBRE sold the offices at 866 UN Plaza on behalf of Vornado Realty Trust. These are management-intensive buildings, sources said, as they house the offices for many foreign countries. Meadow Realty Partners and United Realty Partners will pay $200 million for the adjacent buildings opposite the United Nations.
Meanwhile, Savanna Partners is one of the local firms competing for underperforming but solid-boned assets.
“There is competition and a lot of interest in real estate in New York City,” said Savanna’s partner Christopher Schlank. “There is not as much competition for the core-plus asset and we are doing four to five deals a year but have to stick to our underwriting.”
There is also continuous interest from investors for development sites that are suitable for either condominiums or residential rentals, as well as recently developed or prewar rental buildings that can be converted to condominiums. “In the last year it’s been a hot market,” said Paul Leibowitz, executive vice president of CBRE who focuses on residential transactions, adding that demand is still strong, especially for value-add opportunities.
CBRE just sold the New Gotham 80/20 rental at 520 W. 43rd St. for about $170 million on behalf of the project’s developer, the Gotham Organization, and its investor, AIG Affordable Housing. David Picket, president of the Gotham Organization, said the offers were too good to pass up.
“It just made business sense,” Picket said. He is looking for value-added and ground-up projects similar to the city-owned land he is buying in Brooklyn where Gotham will develop rentals.