ARCP-Affiliated REIT Closes on Chelsea Office Building for $112M
- Apr 01, 2013
American Realty Capital New York Recovery REIT Inc. has closed on its $112 million acquisition of the fee simple interest in a 13-story, institutional-quality — but recently troubled — office building at 216-18 W. 18th St. in Manhattan’s Chelsea neighborhood, the company announced Thursday.
The seller was a joint venture between Atlas Capital Group, of New York, and GreenOak Real Estate, of Tokyo, according to a mid-January release by the buyer. The JV had purchased the defaulted loan last year, and then took ownership of the 165,700-square-foot property through a prepackaged bankruptcy restructuring.
Atlas and GreenOak subsequently entered into lease agreements with Red Bull North America, Inc., SAE Institute of Technology Corp. and Yammer Inc. for a total of seven floors. (Yammer is an enterprise social network service that was bought by Microsoft in 2012 and reportedly is widely used by Fortune 500 companies and others.)
Deluxe Media Creative Services Inc. and SYPartners round out the tenant roster at the building, which is now 84 percent leased. CBRE is currently handling the property.
“This was an off-market, privately negotiated purchase of a great building in the ‘Silicon Alley’ area of Manhattan,” Michael Happel, the REIT’s chief investment officer, stated in a release. “We believe this is one of the strongest submarkets in the city and this property has high-quality tenants, as well as upside potential from both lease-up and rent growth opportunities.”
Atlas Capital Group’s website notes that “Due to Google’s purchase of the neighboring 111 Eighth Avenue, the Chelsea submarket is poised to become the hub for information-technology based tenants, and should therefore continue to experience strong growth in rental rates.”
Manhattan’s Midtown South market “remains in high demand,” according to a March report from Cassidy Turley. In the 18.1 million-square-foot Chelsea/Meatpacking submarket more specifically, availability is 7.4 percent, the lowest of any Midtown South submarket. Net YTD absorption was about 277,000 square feet, versus 157,000 square feet of negative net absorption for Midtown south overall. Asking Class A rents in Chelsea/Meatpacking average $73.18.