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Middle Market Digest – The Northeast

Here is a roundup of the latest leases, sales and other transactions in the Northeast middle markets.

This week by the numbers

Colliers International has taken a look at the Northeastern Pennsylvania “big box” warehouse economy in the fourth quarter and is seeing a “robust 2018 on tap.”

About 17.9 million square feet of new deals were completed in 2017, setting a new cycle-high for yearly transaction volume and besting the previous record, 15.9 million square feet, recorded in 2016. Increased occupier activity boosted absorption, resulting in a market growth rate of over 5 percent for the fifth consecutive year. All submarkets posted positive absorption and market growth. Northeastern Pennsylvania, the region’s smallest submarket in terms of inventory, observed the highest growth rate at 7.78 percent for the year. Annual deliveries (13.3 million square feet) were down slightly from 2016 levels (15.3 million square feet), affected by a momentary pause in the Lehigh Valley/I-78 corridor’s delivery pipeline. Construction starts picked up considerably over the course of 2017, spreading to new locations along the region’s interstate corridors, setting the stage for an estimated 21.6 million square feet of deliveries in 2018.

Though the vacancy rate ticked upwards over the course of 2017, increasing from 5.09 percent at the start of Q1 to 6.4 percent at the close of Q4, it remains line with recent oscillations and below the historic norm. Roughly 75 percent of the year’s new construction delivered in the final half of 2017, and vacancy will trend downwards again in the first half of 2018. Overall asking rental rates grew by 4.3 percent year-over-year. Among the individual submarkets, rental rate appreciation was most pronounced in Northeast PA, where a 9.4 percent increase was observed, boosted by a marked increase from recent years in the availability of high-quality, speculative facilities.

Deal Tracker Daily

NEW YORK, NY—Primary, a wellness-based shared co-working company, has signed a 10-year lease for 31,083 square feet at 251 West 30th Street, on the second, third, fifth and sixth floors. It is the largest lease signed to date at the property, since it was acquired in 2016 by a partnership comprising HSP Real Estate Group and Marciano Investment Group. The Newmark Knight Frank office leasing/investment sales team of Billy Cohen, Andrew Weisz, J.D. Cohen and Evan Foley represented the landlord. The tenant was represented by Cresa Managing Principals Peter Sabesan and Richard Selig.

NEW YORK, NY—Newmark Knight Frank completed a new, 11,300-square-foot lease at 404-408 West 14th Street on behalf of the property’s owner, The Winter Organization. An NKF team of Managing Director Anthony Sciacca, Executive Managing Director Robert Silver, and Associate Richard Johns represented ownership. The tenant, RAB Lighting, was represented by Joe LaRosa of ABS Partners Real Estate. RAB will be relocating its corporate headquarters to 404-408 West 14th Street from its current location at 535 W. 24th Street, with a new, eight-year lease. RAB plans on using the space with minor modifications for both offices as well as its showroom. Asking rents in the building hover in the mid-$60s per square foot.

MEDFORD, MA—Radio conglomerate AM-FM Broadcasting/iHeartMedia has more than doubled  the amount of its office and studio space at One Cabot Road, a modern, amenity-filled office and R&D building located adjacent to the Orange Line’s Wellington Station. The media and entertainment leader signed a lease for an additional 21,504-square-feet of office space just sixteen months after committing to a 20,365-square-foot office space lease in September 2016. In 2017, The Davis Companies repositioned One Cabot with significant capital improvements that brought more than 17,500-square-feet of top-tier amenities to the building. Working with Marguilies Perruzzi Architects, The Davis Companies fully renovated the two-story lobby with networking and collaboration spaces; a re-energized 10,333-square-foot cafeteria, which The Davis Companies transformed into a fun, social environment; an updated fitness center with locker rooms and showers; a 10,000-square-foot outdoor patio with expansive views of Boston and Boston Harbor, comfortable year-round seating, a fire pit and game space, and additional visitor parking.

MONTICELLO, NY—A joint venture partnership between Heidenberg Properties Group, Strategic Real Estate Partners and Norse Realty Group has just signed a new lease with Middletown Medical Group at the Thompson Square Shopping Center in Monticello, NY. Middletown Medical Group will occupy 8,413 square feet at the Sullivan County retail center by combining three tenant spaces, two of which were previously unoccupied, for its newest location. The medical office currently offers a full range of patient services to Sullivan, Orange and Ulster Counties. The Thompson Square location will enable Middletown Medical to consolidate two existing Monticello physician offices and is expected to facilitate 20 exam rooms, an X-ray unit, and a state-of-the-art CAT scan machine. They will also provide urgent care services.

BOSTON, MA—NAI Hunneman recently brokered the $3.25 million sale of 15 Story Street, a 4,618 square-foot office building located a short walk from Harvard Square. Executive vice president Carl Christie and assistant vice president Dan McGee represented the seller, Chatham Light Realty, and procured the buyer, 15 Story Street LLC. Christie & McGee also represented the Lynn Hospital Medical Building Trust in the $3.3 million sale of 225 Boston Street in Lynn, MA (pictured). The seller of 15 Story Street used the sale proceeds to complete a 1031 exchange into the Lynn building. NAI Hunneman represented the seller and procured the buyer in both transactions.

SUMMIT, NJ—Avison Young has been named exclusive leasing agent for two trophy properties in Summit, NJ. The Avison Young team will now be representing both 25 Deforest Avenue (pictured), a recently renovated, Class “A” 130,000-square-foot office building and the adjacent property 1 Deforest Avenue, a 65,000 square-foot, Class “A” office building. Jeffrey L. Heller and Paul Errigo, Associate, are marketing the available space on behalf of new owners, Rockwood Capital. Rockwood Capital purchased the properties from Normandy Real Estate Partners and MRY Associates in the fourth quarter of 2017. 25 Deforest Avenue includes freshly-updated common areas, new windows and entrance, and exquisite landscaping. Ideally located in downtown Summit, the building is just two blocks from the Summit Train Station and is close to the Short Hills Mall and the Short Hills Hilton. 1 Deforest Avenue, also known as the Summit Executive Center, features 65,000 square feet of class A, headquarters-quality office space and was also recently renovated. Current tenants at the fully occupied building include McKinsey & Company and Merrill Lynch & Co.

NEW YORK, NY—Equity Office has signed a new 15-year lease with The Little Beet at 5 Bryant Park, its 34-story Class-A office tower in Midtown Manhattan. The Little Beet is a multi-unit restaurant offering healthy, gluten-free culinary options inspired by local, seasonal and wholesome ingredients. Founded in 2014 in New York City, The Little Beet is run by NYC-based restaurant group Aurify Brands, which builds, owns and operates a network of restaurant concepts, including Melt Shop, Fields Good Chicken, MAKE Sandwich, and Five Guys. The Little Beet will occupy 1,686 square feet on the ground level of the building beginning in the second quarter of 2018.

Money Moves

NEW YORK, NY—Greystone has provided a $19.2 million Fannie Mae loan as part of a $32.25 million property acquisition by AMS Acquisitions in Bayonne, NJ. The loan was originated by Avrom Forman of Greystone’s New York office. The seven-year Fannie Mae loan includes six years of interest-only payments and a 30-year amortization. The 85-unit complex is spread over two five-story buildings that include studio, one-, and two-bedroom units, and which were completely gut-renovated in 2013. The acquired property includes three undeveloped parking lot parcels, which AMS Acquisitions intends to develop into additional multifamily housing.

NEW YORK, NY—Marcus & Millichap says Stephen Westerberg has joined the firm as first vice president-investments, to focus on investment sales in Connecticut and Westchester County. Westerberg is one of the region’s top investment sales executives specializing in retail, office, industrial and multi-family commercial properties. Before joining Marcus & Millichap, Westerberg headed the Connecticut and Westchester investment sales division for Newmark Knight Frank and Colliers International.

HACKENSACK, NJ—Alfred Sanzari Enterprises has promoted John Schleer to director of project management. The Roxbury, NJ, resident joined the real estate development and operating company in 2007 as a construction project manager. The new title marks an extension of Schleer’s role within the construction department, where he will continue to oversee numerous pre-construction and construction-related activities throughout Alfred Sanzari Enterprises’ real estate portfolio. He will also work closely alongside the company’s leasing department, building supervisors and tenants.

 

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