Madison Realty Shells Out Financing for M-U Project in Williamsburg
- Jan 07, 2015
Madison Realty Capital gives its support to 55 Wythe Ave., the site of a planned $130 million mixed-use development in Brooklyn, N.Y.’s increasingly popular Williamsburg neighborhood, by providing $81 million in financing for the 260,000-square-foot project.
The project developer, Zelig Weiss, was represented in the transaction by Imperial Capital Co. and Nationwide Realty.
The 22-story tower at 22 Wythe will feature the 183-room Level Hotel on the upper levels of the building, as well as 40,000 square feet of restaurant and retail space. Additionally, the property will offer five stories of lower level office space designed to appeal to Williamsburg’s growing pool of users in the technology and creative fields.
The financing follows the nearly $18.4 million acquisition loan MRC provided the borrower in May.
“We are excited to provide this subsequent round of financing to fully capitalize the project,” Josh Zegen, managing principal of MRC, noted in a prepared statement. “The sponsor has been able to make significant progress since we closed our initial acquisition loan by substantially completing all foundation work and building the one-story retail component of the project.”
A hotel property in Brooklyn is a pretty safe bet these days. According to a mid-2014 report by Massey Knakal Realty Services (now Cushman & Wakefield), the performance of Brooklyn’s hotel market remained strong despite increasing supply, ADR jumped to record levels and the occupancy rate was notably above the national average. “Brooklyn’s hotels leverage the high urban density and growing business and leisure travel to the Borough,” per the report. “An increasing percentage of New York’s over 55 million visitors are making the choice to stay in Brooklyn hotels, a figure that is likely to continue as the Borough continues to develop world-wide appeal for all types of travelers.”
Brooklyn’s office and retail sectors are thriving, too. The presence of tech-industry office users is on the rise as the area becomes increasingly popular among smaller tech firms attracted to the comparatively lower rents and close proximity to employees, as noted in a report by Marcus & Millichap Real Estate Investment Services. And stiff competition among retail tenants in Brooklyn triggered an increase of more than 10 percent in retail rents between mid-year 2013 and mid-year 2014.
The risk for MRC appears to be quite low.