A 62-unit rent-regulated building in the East Village just traded hands for the first time in over three decades for $26.5 million, or about $627 per square foot.
Marcus & Millichap’s Peter Von Der Ahe, Joseph Koicim and David Lloyd represented the seller, Rubin Margules, whose holdings are primarily in Brooklyn’s Flatbush and Sheepshead Bay neighborhoods. The property, located at 20 Avenue A on the corner of East 2nd Street, was asking $27.5 million, or about $651 per square foot. The buyer was identified only as a Manhattan-based investor.
The 42,275-square-foot, five-story property currently has a net operating income of $811,655, according to the offering memorandum. It contains 33 studios and 27 one-bedroom apartments, with Chase Bank occupying the ground-floor retail space. Average rents for the residential portion are about $1,300 a month, with renters just a few steps from the famed pastrami sandwiches at Katz’s Delicatessen.
“Given the fact the building was fully-rent regulated, many prospective purchasers had a rough time wrapping their arms around this asset,” Koicim said, “but we were able to procure a buyer who paid within ten percent of our asking price and plans to hold this long-term.” Von Der Ahe noted the rarity of having so many rent-regulated units “paired with a credit retail tenant.”
Prominent local investors including Jared Kushner and Benchmark Real Estate Group, have deemed the East Village rife with opportunity, and are aggressively expanding their rental portfolios in the neighborhood.