NEW YORK, NY
In a joint venture with Herald Square Properties, The Davis Companies acquired two office properties in the Garment District of Midtown Manhattan in January 2014. The two properties were acquired through an off market transaction and totaled 210,718 RSF. The buildings are located halfway between the retail and entertainment centers of Herald Square and Times Square, and are in close proximity to Penn Station and Grand Central Station.
With office rents rising into the $50s per rentable square foot at nearby Avenue locations, these buildings were well positioned to serve as a value alternative for tenants looking for more affordable locations relative to Avenue buildings and Midtown/Midtown South. Upon acquisition, a capital improvement plan was implemented to upgrade common areas and the lobbies in order to capture the young, high-growth companies increasingly priced out of other high-demand Manhattan office submarkets.
Value Creation Strategy
Through active marketing The Davis Companies was able to sign over 45,000 SF of new leases at or above pro-forma rents. Given the strong leasing momentum at the property as well as within the larger submarket, coupled with the exceptional investor appetite for NYC real estate, the asset was brought to market in early 2015. In May 2015, the properties were sold to institutional investors several years ahead of schedule at prices in excess of underwriting.