Sterling Organization, a private equity firm based in Palm Beach, Fla., doubled its money on the sale of a 7,634-square-foot parcel at 456 N. Rodeo Drive in Beverly Hills. Sterling netted a cool $110 million for the property—which includes a 6,200-square-foot vacant single-story building and a 1,500-square-foot parking lot between Santa Monica Boulevard and Brighton Way—in the heart of the so-called “Golden Triangle,” one of the country’s most sought-after locations for luxury retail, according to an official release from Sterling. Last week’s sale came a mere day after Sterling closed its purchase of the property from The Karl B. Schurz Trust (Schurz Trust) for $55 million.
The purchaser of the property, a subsidiary of Paris-based, multinational conglomerate LVMH originally considered leasing space at the property, but the company alternatively expressed an immediate interest in acquiring it. LVMH, which counts Louis Vuitton and Loewe among its portfolio of upscale brands, owns two other stores in the area at 319-323 North Rodeo Drive and 420 North Rodeo Drive, according to The Wall Street Journal, which broke the news of the sale.
LVMH declined to comment on the purchase.
Sterling’s acquisition of the property resulted from a highly structured off-market transaction, when it signed a 30-year ground lease with rights to purchase on Oct. 26, 2017.
Last week’s sale transferred the 456 N. Rodeo Drive property to the luxury goods behemoth for approximately $17,750 per square foot.
Retail agent Robert Cohen, a vice chairman at RKF in Los Angeles, commenting on the deal, said the move for LVMH was a “very smart move” and part of an overall trend of European retailers investing in brick-and-mortar real estate in top U.S. shopping districts.
“This is a trend we’ve seen more and more of, which is personified on Rodeo Drive for several reasons, the least of which is that it’s only three-blocks long, an easy market and low-density. These retailers don’t have to worry about offices, residential or hotels, which is more difficult,” he said.
“Rents have gone up historically. It’s held its value. Europeans are very smart because they have not only the ability but they understand buying is better long-term than leasing. You control your own destiny.” (This is a trend that WSJ recently noted in Manhattan.)
Cohen pointed out that while $17,000-plus a square foot is high considering the comparables, over time, it works out to make good business sense. Average asking rents per per square foot on Rodeo Drive ranges from $600 to $1,000, Cohen said, so, say, over 20 years, the price paid averages $850 per foot. “You’re at the middle of the market, but now you own the property. Not only are you not paying rent, but you have an asset that is increasing in value,” he said.
Indeed. Rents on this stretch of Rodeo Drive, home to luxury retailers including Hermes, Chanel, Celine, Tiffany & Co. and Givenchy, rank among the highest in the nation. Retail rents on Rodeo Drive were $875 per square foot in 2017, according to statistics from Cushman & Wakefield’s 2017 year-end Los Angeles retail report, making the locale the second-highest in the nation. (Upper Fifth Avenue—49th Street to 60th Streets—in New York City still dominates, the C&W data indicate, closing 2017 at $2,982 per square foot.)
Negotiations for 456 N. Rodeo Drive began in July 2017 between Jonathan Mendis, Sterling’s senior vice president of investments for the Western United States, Brian Kosoy, Sterling’s president and CEO, and the trustee for Schurz Trust. The months of negotiations culminated in the October 2017 ground lease execution and purchase of the fee interest.
“When a circumstance presents itself to acquire a Rodeo Drive property, you aggressively pursue it, regardless of the complications involved in getting a deal done,” Kosoy said in prepare remarks. “This was a win-win-win for all three parties involved with each securing what they desired. The deal round-tripped a lot faster than we projected, and we are extremely pleased with the exceptional financial results we were able to provide to our investor partners.”
Kosoy told Commercial Observer his firm flipped the property because it felt it was in the best interest of its investor partners.
“Part of the opportunity in the commercial real estate sector pertaining to retail is that the passive observer, analysts, as well as much of the media, seem to repeatedly throw the baby out with the bathwater,” Kosoy said. “There are many areas that are immune to the woes of retailers today and Rodeo Drive is one of them. Great retail real estate is not under assault as many believe.”
He foresees Rodeo Drive real estate going in only one direction value wise: higher. “Continued limited and static supply and high demand assures such,” Kosoy said.
Cohen concurred, calling Sterling’s flip, “a brilliant play.”
“It’s an amazing story,” he added. “From a real estate perspective, they tied this up to a ground lease with an option to purchase, obviously purchased, it and to turn this around in a day and sell it, to basically double your money— that shows how voracious an appetite some of these people— these retailers have for real estate.”
Source: commercial
Lightstone Group has purchased a Hilton Garden Inn at 29-21 41st Avenue in Long Island City for $60 million, according to property records filed with the city today.
Lightstone took out a $35 million mortgage from Western Alliance Bank to purchase the property, records show. A spokesman for the developer didn’t immediately return a request for comment.
A group of investors that includes Sagamore Capital and Ranger Properties sold the hotel. They bought the 6,700-square-foot site it sits upon for the bargain basement price of $6.3 million in 2010.
The 16-story, 183-key hotel was completed and opened in 2015, Brownstoner reported at the time.
The Hilton will be Lighstone’s fourth hotel in New York City, after developing millennial-focused Moxy hotels at 485 7th Avenue, 105 West 28th Street and 112 East 11th Street. And it’s not Lighstone’s only property in the neighborhood. In November 2017, the firm finished a 428-unit residential tower, the ARC, at 30-02 39th Avenue.
Source: commercial
Google, which already occupies a significant portion of the 1.2-million-square-foot Chelsea Market building, has sealed a deal to buy the mixed-use property from Jamestown for $2.4 billion. The transaction was finalized today, according to a press release from Jamestown.
Jamestown will continue to manage the retail and food hall at Chelsea Market, a former Nabisco factory at 75 Ninth Avenue that occupies the full block between Ninth and 10th Avenues and West 15th and West 16th Streets, the release indicates. And according to The Wall Street Journal, Jamestown will retain the branding rights and intellectual property connected to the Chelsea Market name outside of Manhattan.
“For Jamestown, this is the highest-profile example to date of our unique approach to creating value, but it’s consistent with transformative projects we’ve successfully undertaken across the country,” Michael Phillips, the president of Jamestown, said in a statement. “It’s a combination of identifying underutilized locations, creative and visionary repositioning, value-creating management, rigorous financial analysis and patience.”
Jamestown purchased a 75 percent stake in Chelsea Market in 2003 for $280 million, according to property records. Then it bought out its partners in 2011, spending a total of $795 million, records indicate. Office tenants in 75 Ninth Avenue include Google in 400,000 square feet, as well as Major League Baseball and the Food Network.
Google has been growing its footprint in Chelsea. In 2010, the tech giant bought 111 Eighth Avenue from Jamestown, Taconic Investment Partners and the New York State Common Retirement Fund for $1.77 billion. That property, which houses Google’s headquarters, is across from Chelsea Market. Last year Google expanded by 60,000 square feet to 240,000 square feet at 85 10th Avenue between West 15th and West 16th Streets, as CO previously reported. And at Pier 57, Google plans to tack on 70,000 square feet for offices and 50,000 square feet for public engagement space to the 250,000 square feet it has already leased.
Google, a unit of Alphabet Inc., said in an official statement: “This purchase further solidifies our commitment to New York, and we believe the Manhattan Chelsea Market will continue to be a great home for us and a vital part of the neighborhood and community.”
Cushman & Wakefield‘s Douglas Harmon, Adam Spies, and Kevin Donner represented Jamestown in the deal. Harmon declined to comment. Darcy Stacom of CBRE represented Google. Stacom’s assistant said the broker is on vacation.
Source: commercial
Thor Equities and Premier Equities have closed a deal to sell their three-story retail condominium at 412 West 14th Street for $87 million, sources with knowledge of the deal told Commercial Observer.
The buyer is Union Investment, the investment arm of DZ Bank, as The Real Deal reported last month when the deal was in contract.
Lexus leases the entire 16,500-square-foot condo, plus 5,500-square-foot rooftop at the property between Ninth Avenue and Washington Street via a 10-year deal that expires in April 2024, the sources said. The luxury carmaker is still building out the space for a concept store.
Cushman & Wakefield’s Adam Spies, Kevin Donner and Marcella Fasulo represented Thor and Premier. A spokesman for Thor declined to comment, as did Spies. A Premier representative wasn’t immediately reachable. RKF’s Brian Segall represented the buyer. Segall declined to comment.
Premier and Thor bought the commercial condo in April 2012 for $18 million.
Source: commercial
Real estate investor Nader Ohebshalom’s Gatsby Enterprises has acquired a Harlem office and retail building at 75 West 125th Street from owner and sole tenant Carver Federal Savings Bank for nearly $19.5 million, Commercial Observer has learned.
Gatsby is paying just shy of $700 per square foot for the four-story, 27,933-square-foot property between Fifth and Lenox Avenues, which currently houses Carver Federal Savings Bank’s headquarters in its office portion and a bank branch in its ground-floor retail space. The two sides entered contract late last year and closed on the transaction on Feb. 22, according to sources with knowledge of the deal.
The bank is expected to vacate its offices at the building before the end of this year but maintain its retail presence on the ground floor by leasing back the space, sources said. The arrangement allows Gatsby to re-tenant the office space at higher rents while removing the risk of having to find a new street-level tenant in a challenging retail environment.
In addition, the Harlem property features unused development rights that take its total buildable square footage to around 70,500 square feet, the sources added—enabling Ohebshalom’s firm to potentially redevelop the site into a larger building in the future.
Gatsby was represented by broker Joshua Nazar of Venture Capital Properties, while a Colliers International team of Eric Yarbo, Christopher Turner and Sam Hamlin represented Carver.
Representatives for both Colliers and Venture Capital Properties confirmed the transaction but declined further comment. Neither Gatsby nor Carver Federal Savings Bank returned requests for comment.
Source: commercial
Residential development firm Anbau has acquired two adjacent parking garages at 620 West 153rd Street in the Hamilton Heights section of Upper Manhattan for $22.5 million with the goal of building residential condominiums on the site, Commercial Observer has learned.
Anbau closed on its purchase of the two-story garages between Broadway and Riverside Drive earlier this month after entering contract late last year. The seller, Verizon, has been using the facilities to park and house its service vehicles.
Having finalized its acquisition of the site, which features approximately 150,000 buildable square feet, the NoMad-based development firm has drawn up plans for two luxury residential condo buildings, designed by architecture firm DXA Studio, that will be connected via a landscaped courtyard and feature views of the Hudson River.
“We see [Hamilton Heights] as the next logical emerging neighborhood,” Anbau Founder and President Stephen Glascock told Commercial Observer. He cited how prices have “shot up substantially” for both condos and rentals in areas like the Manhattanville section of West Harlem, to the south of Hamilton Heights.
Glascock said the two planned condo buildings would likely hold around 150 units combined, with prices for the all-market-rate units likely to range from below $1 million to up to $3 million. Anbau, which financed its acquisition of the site with a pre-construction bridge loan from Goldman Sachs, expects to begin work on the project within the next six months with a view to completing the development in the next two to three years, he added.
Anbau will also provide parking for Verizon and its service vehicles at the property, Glascock said, with those accommodations to be separate from the parking provided to residents at the condo development.
Representatives for Verizon could not be reached for comment.
Verizon had retained Cushman & Wakefield’s Bob Knakal, Josh Kuriloff, Jonathan Hageman and Patrick Yannotta to market the property. Anbau had no broker in the deal.
Knakal told CO that C&W received “extremely robust budding activity on the property” from prospective buyers, which he attributed to “the positive changes that the [Hamilton Heights] neighborhood has experienced over the last 10 to 20 years.”
“It’s a very desirable location,” Knakal said, pointing to rising interest in the market for Upper Manhattan development sites at large—including at 4109 Broadway in Washington Heights, where C&W has been retained to sell a four-story church building with nearly 90,000 buildable square feet on behalf of Christ Church, United Methodist of New York City.
That property will likely be converted into residential condos as well, Knakal added, noting that developers are increasingly looking uptown to take advantage of lower land costs “that make it a lot more feasible to build condos”—particularly at a price point more appealing to prospective residential buyers.
Glascock agreed, noting that the Anbau “can pass on that low land cost to translate to lower prices for condos” at its new site and that the firm believes there is “strong demand” for units in the $1-million to $3-million range that will be served by the new Hamilton Heights development.
Anbau specializes primarily in the Manhattan condo market, with recent projects including Citizen360, an 84-unit SHoP Architects-designed building at 360 East 89th Street in Yorkville, and 207W79, a 19-unit Upper West Side property at 207 West 79th Street designed by Morris Adjmi Architects.
The firm also owns several multifamily rental properties in the borough; in December 2017, Anbau acquired two five-story buildings holding a combined 22 apartments at 53-55 First Avenue in the East Village for $16.2 million.
Source: commercial