NEW YORK CITY-As Midtown South continues to evolve into the “Silicon Alley” of the East Coast, a prime Flatiron District building will be repositioned to suit the needs of the growing technology sector in the neighborhood. An investor group organized by Earle S. Altman of ABS Partners Real Estate, LLC and real estate investor Richard Hadar have acquired 915 Broadway, a 20-story, 250,000-square-foot office and retail property at East 21st and Broadway for $140 million in an off-market transaction, GlobeSt.com has confirmed.
“We liked the fundamentals, we liked the location, we liked the access to transportation, we liked the play on technology going forward,” Gregg Schenker, principal of ABS Partners, tells GlobeSt.com, noting that the building is currently home to companies like Union Square Ventures, Jump Associates and General Assembly, and the management hopes to attract new innovative businesses to the property as well. “We have a couple of wonderful core technology tenants and we would like to build on that going forward,” he adds.
The all-in acquisition, including the prepayment of the existing mortgage, was financed by JP Morgan Chase, which was arranged through Simon Ziff, Russell Schildkraut, and Jonathan More of the Ackman-Ziff Real Estate Group. In addition to Altman and Schenker, ABS’ Steven Hornstock and James Caseley are equity participants in the acquisition, along with industry veterans John Zirinsky and Jeffrey Feil. Previously in 1981, Altman and a group of investors acquired the building for $6 million, and the new managers plan to capitalize on the building's location and strength in the market. According to brokerage sources, Midtown South has the lowest office vacancy rate in Manhattan, and possibly the nation, at 5%.
Built during Manhattan’s “Golden Age” of construction, Schenker says the 1920s-era building will be redesigned and expanded over the next three to five years, which is expected to cost between $7 and $10 million. The Broadway entrance will be modernized and widened, with a new two-story lobby. Additionally, the retail space, containing more than 14,000 square feet and currently occupied by a restaurant, will be available for lease in the first quarter of 2014. "We are looking for a tenant that is a better fit with the long-term thinking for the building," Schenker says. "Ideally, a technology tenant."
The property also benefits from an abundant existing power supply. According to ABS, the property features an ultra-high bandwidth Internet service at each tenant’s premises via a network of fiber optic cable that runs through the building and is connected to the Verizon redundant fiber loop, which provides high-capacity connectivity and protection against service interruptions.
As a whole, the acquisition complements ABS Partners’ portfolio in Union Square, Madison Square Park and Gramercy Park, as well as the holdings of Richard Hadar, whose previous acquisitions include the Citicorp Center at 601 Lexington Avenue and the LVMH building at One East 57th Street.
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