Harlem River of the Bronx and Manhattan in New York City.
NEW YORK CITY –In the South Bronx, a wave of development is sweeping over the Mott Haven submarket and for good reason, as it is one of the closest Opportunity Zones to Manhattan. And institutional investors are rushing in to break ground on retail, community facility, and residential-focused developments. But not ZG Capital Partners, the development firm see's a great opportunity in the submarket to roll-out creative office for a live-work-play feel, James Tamborlane, partner at the firm tells GlobeSt.com.
"There's a big driver to move to the outer boroughs and rent is much more affordable," Tamborlane said. "As the submarket grows and grows, rents will grow with it. It's a good time in the market place to invest when there's growth to be had and be at the forefront of development."
ZG Capital is a partnership between Bobby Zar of the Zar Group and James Tamborlane formerly of MHP Real Estate Services. The pair just purchased the Bruckner Building for $65M, an eight-story, 188,000-square-foot property comprised of commercial lofts at 2417 Third Ave. in the Bronx. The venture secured an estimated $45 million of financing from Ladder Capital.
The property is the first for the venture who plans to go boldly into the Bronx to acquire and reposition office, industrial and mixed-use buildings, including in Manhattan and the outer-boroughs, viewing those submarkets as an opportunity to capitalize of REAP benefits of the Relocation and Employment Assistance Program. The program offers businesses income tax credits for relocating jobs below 96th Street in Manhattan to designated locations, or above 96th Street and in one of the other four boroughs.
"With almost 20 years at MHP and Bobby's expertise in creatively repositioning properties into stong assets like the office building at 1450 Broadway in Times Square, we thought to join forces to create a new venture with the goal of buying office buildings to reposition for creative office going forward," Tamborlane said.
There is a bunch of development in the Bronx submarket as of current. With Brookfield's mixed-use development dubbed the Bankside as one of the largest properties crowning the submarket, and where 2417 Third Ave. sits adjacent.
Many of the players are large institutional developers, investing in the South Bronx because of its subway access, bridges connecting across the river to Manhattan, and is one of the closest Opportunity Zones to Manhattan. Cushman & Wakefield arranged the financing for ZG Capital's new office at 2417 Third Ave. and testify's that the market is lit up with investor excitement.
According to Gideon Gil, of the firm's equity, debt & structured finance team, the property has a lot of upside, which made more sense to procure a floating rate loan to secure even more proceeds in three to five years. "Lenders liked the story. Every lender we brought out to the property witnessed the asset and partnership and looked at all that's happening with residential and transportation nearby, it made it compelling for lenders," Gil tells GlobeSt.com.
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Mariah Brown
Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.
