Last week’s lukewarm response to the Empire State Realty Trust’s initial public offering may have made investors nervous, but the real estate investment trust holds a number of Garment District properties — in addition to the iconic tower the trust is named for — and those may prove to be its saving grace.
The IPO was for a portfolio that includes the Empire State Building as well as 17 other office and retail properties in Manhattan and Westchester counties in New York and Fairfield County in Connecticut. Among these are several buildings in the rapidly-changing Garment District, including 1350 Broadway, 501 Seventh Avenue, 1359 Broadway and 1333 Broadway.
The REIT also has options to buy 112-122 West 34th Street and 1400 Broadway, the Wall Street Journal reported. A spokesperson for the REIT declined to comment to the newspaper.
The Garment District’s relatively affordable rent has made it an attractive option for tenants in the technology, advertising and media industries, collectively known as TAMI tenants. While rents in Midtown South — which has been especially attractive to technology tenants in the last few years — are about $75 per square foot, Garment District rents are only $59 per square foot, according to data from commercial brokerage Cassidy Turley.
Earlier this year, the REIT’s management team – led by the Malkin family – lured Urban Outfitters to 1333 Broadway, a deal that will add $6 million of annual revenue to the building’s income stream, Michael Knott, an analyst at Green Street Advisors, told the Journal.
“It’s emblematic of why I think there’s reason to like this part of the portfolio,” Knott said. [WSJ] – Hiten Samtani