The Real Deal New York

Olmstead, Jonathan Rose pay $85M for DKNY office building

AEW, investment fund part ways with 160K sf Garment District property after 2 years

May 07, 2015 02:20PM
By Mark Maurer

240 West 40th

240 West 40th Street in the Garment District (Inset, clockwise from left: Jonathan Rose, Stephen Shapiro, Richard Baxter and Samuel Rosenblatt)

Samuel Rosenblatt’s Olmstead Properties and Jonathan Rose Cos. picked up the Garment District offices of fashion house DKNY for $85 million, The Real Deal has learned.

Designer Donna Karan’s company occupies the entire 11-floor office component of the roughly 12-story, 160,000-square-foot property at 240-248 West 40th Street, between Seventh and Eighth avenues. The space is used for showrooms and back office space.

Retail tenants include Boi Noodle House, Dunkin’ Donuts and Guy & Gallard.

Boston-based AEW Capital Management and commercial brokerage Colliers ABR paid $63 million for the property, then owned by a Sitt Asset Management-led group, in 2013. Colliers ABR became part of Cassidy Turley, which is now DTZ. Prior to the sale, an investment fund run by DTZ employees — but not affiliated with DTZ — owned the building with AEW.

A JLL team led by Richard Baxter and Stephen Shapiro represented both the buyers and the sellers.

“For the first time ever, the average price of a Class-B office building in Manhattan is north of $850 per square foot, signifying investor confidence for strong continued rental growth,” Baxter said.

DKNY’s New York City headquarters is located at nearby 550 Seventh Avenue. The company’s lease on 40th Street expires July 2016. A DKNY spokesperson could not be immediately reached.

The tenant is considering whether to renew its lease, but if it does not, Rose told TRD that the owners would seek another fashion tenant to fill the space. The new ownership plans to install new elevators and renovate the lobby.

Olmstead owns and manages six other buildings in a three-block radius, Rosenblatt said. This deal marks the Garment District-based investment firm’s first partnership with Rose, one of the top affordable housing developers in the city.

Elsewhere in the Garment District, smaller fashion tenants are being pushed out.