Savanna Kisses 31 Penn Plaza Goodbye
- Aug 11, 2015
By Keith Loria, Contributing Editor
The Vanbarton Group L.L.C. is the latest company to enter the burgeoning New York City office market, acquiring 31 Penn Plaza, an 18-story, 444,000 square-foot office building, from Savanna for a reported $265 million.
“We had also successfully sold 21 Penn Plaza last year in partnership with the Feil Organization and realized that the entire Westside redevelopment combined with the rise of Midtown South in general had caused significant tenant interest and associated rent growth in this neighborhood,” Kevin Hoo, Savanna’s managing director, told Commercial Property Executive. “We felt that our repositioning effort had achieved its intended impact and with the property 98 percent occupied, the timing was right for us to exit our investment in 31 Penn Plaza.”
Savanna originally acquired the property four years ago for $130 million, and completed $20 million in renovations, including redesigning the lobby, security infrastructure and entrance, modernizing the elevators, restoring the façade, upgrading common areas and adding retail amenities.
During its ownership, Savanna signed a total of 260,000 square feet of leases at the property. Additionally, three new restaurants, Friedman’s, Pennsylvania Six and Dee Daa, opened at the building, significantly improving the street presence.
“The Penn Plaza submarket is one that we saw significant opportunity in at the time (September 2011) and 31 Penn Plaza’s location within that submarket was ideal,” Hoo said. “Despite the significant transformation that was required in order to reposition this asset, we appreciated that the layout of the property and its physical properties were already well suited to a beautiful repositioning that catered to the TAMI-type tenants that we knew were moving into the neighborhood.”
The property is at the heart of the Penn Plaza District, within blocks of numerous transportation hubs including Penn Station, Herald Square, Port Authority and Grand Central Station.
According to Savills Studley’s 2015 2Q Office Sector Report, demand for view space in the Plaza District, as well as in surrounding areas such as Penn Plaza/Garment District, is brisk.
“Landlords in these buildings are holding out for top dollar and can scrutinize the firms competing for their space more rigorously,” said Bill Montana, Savills Studley’s senior managing director in a prepared statement. “Class A tenants seeking 10,000 to 40,000 square feet, particularly those who are geographically flexible, have a wealth of options. Informed tenants who do not have a very limited geographical or floor requirement can take a calculated approach to leasing.
Douglas Harmon, Adam Spies, Joshua King, Adam Doneger and Michael Saclarides of Eastdil Secured represented Savanna in the sale transaction.