Nightingale Properties has acquired 14 53rd Street in Sunset Park from Madison Realty Capital (MRC) for $84.1 million. MRC repositioned the former industrial property into offices, and renovated the lobby and added new elevators + windows. As part of this deal, MRC invested an additional $5 million in the asset, and will reportedly keep a minority stake in the project, CO reported.
- Worth Noting: Nightingale also assumed the $90 million loan that Madison took out from TPG Capital in 2018. MRC was reportedly considering handing the 500,000-square-foot building over to the lender instead of paying the debt that remained, according to the WSJ.
- Be Smart: Despite companies being able to legally return to the office across Manhattan, occupancy of office space is less than 15%. Overall leasing activity is down almost 50% since last year, and sublease space amounts to 25% of the all available space. This number is expected to rise, as there are significant blocks of space rumored to be hitting the market in the coming months, Cushman & Wakefield’s research department noted.
- How to grow a building — NYC style: When MRC paid $82.5 million to acquire the property from Harry Skydell in 2015, it was marketed as spanning 400,000 SF –– 100,000 SF less than today. REBNY instructs its members to measure office buildings very generously. This results in a “loss factor” of 27 percent, which means the tenant has 27 percent less usable space than advertised.
- Market dictates leverage: While landlords and architects use updated CAD [computer-aided design] drawings to grow each individual floor, many joke that measurements are reaching the middle of the street. In this market, office leasing brokers are making this known, as prospective tenants hold significant leverage. [CO+TRD+WSJ+SeekingAlpha]