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West 30s
234 West 39th Street, New York, NY 10018

Thesis

  • At the time of this acquisition, Manhattan’s Midtown South submarket was emerging as a location of choice for office tenants looking for a value option. In particular, we saw a transformation of the Garment district neighborhood centered around the West 30s unfolding, with the emergence of creative office, further fueled by the area’s recent significant capital improvements and new developments on the horizon (e.g., Hudson Yards).
  • 142 W. 36th St and 234 W. 39th St. (The West 30s) provided us with the opportunity to acquire and reposition two well-located, mid-block office buildings in order to capture this growing demand and position the assets for institutional ownership.
  • Following acquisition, the business plan was to undertake a targeted capital improvement and leasing strategy and increase in-place rents from the high $20s per square foot to the low $40s, which still presented a relatively attractive, more affordable option compared to other nearby locations.

Execution

  • Prior to our acquisition, The West 30s buildings had been family owned for over 50 years and had not benefited from ongoing capital improvements or modernization of the tenant and common spaces.
  • We commenced a moderate capital improvement plan that included a new lobby and buildouts of tenant spaces that highlighted the brick walls and high ceilings, attracting a new tenant base and paving the way for higher rents and improved net.
  • We outperformed our original financial underwriting as rapid market rent growth more broadly drove tenant demand to the buildings and created the opportunity for an attractive sale well ahead of the expected holding period to achieve the business plan.

Asset Class

Office

Fund

II

Year Sold

2015

Location

New York, NY

Size

210,000 RSF