Eastern Consolidated's executive director Stuart Gross, with senior director Deborah Gutoff, are marketing the fully occupied, completely renovated property. According to Eastern, the building would serve as an ideal 1031 exchange candidate, since minimal maintenance and management is required, providing significant future upside.
Gutoff tells GlobeSt.com that the seller is the Velum Corp., a single asset entity owned by a local investment group. "The owner believes the property's highest value will be realized in its condominium conversion potential," she says, "but due to tax considerations, has decided to sell in order to receive advantageous long term capital gains treatment versus the ordinary income that it would derive from undertaking the conversion process itself.
Eastern also explains that offshore investors could find this property enticing for the same reasons using the benefit of their strong currency. "All of the residential units were completely renovated in 2002," Gross explains. "The existing J-51 tax abatement was secured in connection with the renovation of the property in 2002 for a 15-year period which expires in 2017. While the units are technically stabilized, there is no practical restriction imposed since the legal rents are substantially in excess of the current preferential rents. Therefore, a new owner will enjoy the benefits of the J-51 tax abatement while raising rents to the legal limit as fast as the market will bear."
The residential units themselves feature soaring ceilings as high as 20 feet with large open layouts. The two penthouse floor units include extensive roof gardens with views of lower Manhattan. The property is situated in the heart of the historic Lower East Side, which is enjoying a major renaissance, according to Eastern.
"The retail rents are significantly under market," Gutoff says, adding that they currently average $68 per sf. "But since their leases all expire within the next two years, the new owner will be able to increase rates as much as 40%, to $115-125 per sf at present market rates."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
