Shorenstein Snaps Up Lightstone-Owned Office Building
- May 04, 2015
In 2007, Lightstone chairman & CEO David Lichtenstein saw long-term value in the 42-story, 1.1 million-square-foot former Garment Center Office building at 1407 Broadway in Manhattan. Lightstone paid $122 million for the building. Eight years later, the privately held real estate company has sold it to Shorenstein Properties L.L.C. for $330 million.
The New York-based firm spent more than $20 million on renovations to the property that fronts on Broadway, 39th Street and Seventh Avenue to transform it from a building filled with ladies apparel tenants to a modern office building. Tenants now include Main Street Hub, Techstars, Land’s End and Dreamworks Live Theatrical. Formerly known primarily as the Garment Center, the area is now in the booming Times Square South submarket of Midtown South, where the vacancy rate is the lowest in Manhattan at 5.5 percent, according to CBRE’s first-quarter Manhattan office market report.
“Lightstone’s recent renovations to the building will allow the property to continue capturing the trend of creativity and collaboration among today’s growing global companies,” the company stated in a news release.
Shorenstein, a privately owned real estate firm and fund sponsor based in New York and San Francisco, acquired 1407 Broadway on behalf of its 11th real estate investment fund, a company spokesperson told Commercial Property Executive. Shorenstein Realty Investors 11 was formed in 2014. It has $1.22 billion in committed capital, including $75 million by Shorenstein. Active nationally in the ownership and management of high-quality office properties, Shorenstein confirmed last week that it had purchased 1818 Beneficial Bank Place, a 37-story, 988,000-square-foot office tower in Philadelphia’s Center City, on behalf of Realty Investors 11. Terms of that deal were not disclosed.
Lightstone decided to take advantage of what it called in its news release the “dramatic upward swing in the Garment District.” Late last year it reportedly began shopping the ground lease for the property through Savills Studley.
“After exploring various options for this transaction, we are glad to have worked with Shorenstein, a trusted buyer in commercial real estate that also recognizes and affirms the value in the steadily transforming Times Square South area,” Lichtenstein said in a prepared statement.
Shorenstein already owns 850 Third Ave. and 477 Madison Ave. in Manhattan. In August 2014, it obtained a $170 million loan from MetLife to refinance 850 Third Ave., the 21-story, 615,000-square-foot East Side office building where it has its New York headquarters.
Lightstone, founded by Lichtenstein in 1988, has a diverse $2 billion portfolio, with assets in 24 states that include more than 9 million square feet of office, retail and industrial properties; 11,000 residential units; and 3,200 hotel keys. In New York City, the firm has $1.7 billion in residential and hospitality projects under development.