Originally built in 1926 as a Macy’s furniture warehouse, the Factory at 30-30 47th Avenue in Long Island City has many of the features favored by tech and media tenants nowadays, like large floor plates and high ceilings, with a dash of historic character.
Atlas Capital Group, Invesco and Square Mile Capital Management acquired the property at a bankruptcy sale in 2013, and invested more than $90 million to redevelop it into creative office space. In 2018, Swiss private equity firm Partners Group invested in the complex by buying a portion of Square Mile’s stake, in a deal that valued the property at $400 million.
Since the redevelopment, the 1.1 million-square-foot building has seen more than 840,000 square feet in leasing activity, with major tenants including Macy’s and several city agencies. This month, the owners secured a $300 million CMBS refinancing from Credit Suisse subsidiary Column Financial, and documents associated with the securitization provide an inside look at the building’s finances.
The 10-story property is currently 83 percent leased to 31 tenants, according to a report on the deal from Moody’s. The top five tenants by square footage pay annual base rent of $29 per square foot on average, somewhat lower than the building’s overall average of $32.
For comparison, the average asking rent in the surrounding neighborhood, east of the Long Island Rail Road in Long Island City, is nearly $43 according to a Cushman & Wakefield appraisal cited by Moody’s. The Factory accounts for one-fifth of all office space in that area.
The building’s largest tenant is Macy’s marketing department, which uses its 146,000 square feet at the property as photography and studio set space, “a crucial part of executing on their omni-channel approach to digital sales” according to Moody’s.
The next two tenants by size are city agencies: the NYC School Construction Authority with 101,000 square feet, and the Department of Citywide Administrative Services with 80,000 square feet. SCA’s base rent of $17 per square foot is far below market, and the tenant has the option to terminate its lease at any time with 90 days’ notice. DCAS’ space is occupied by the NYC Department of Health and Mental Hygiene.
The fourth largest tenant at the Factory is the world’s largest dental equipment manufacturer, Nasdaq-listed Dentsply Sirona. Canadian children’s entertainment company Spin Master — which owns brands like PAW Patrol, Etch-a-Sketch, and the Rubik’s Cube — rounds out the top five.
Other notable tenants at the complex include Ralph Lauren and J. Crew. This year, the landlords have also inked major new leases with luxury watch retailer Tourneau (70,000 square feet) and organ donation non-profit LiveOnNY (58,000 square feet). Ralph Lauren disclosed this month that it was laying off 12 employees at three Queens sites including the Factory, and 333 citywide.
Foot traffic at the Factory has fallen substantially due to the pandemic, while rent collection has remained robust, with 97 percent of gross rent collected from February through September. The building is operating at 20 percent capacity, according to Moody’s, and retail tenants are operating on a rotating basis with one or two stores open each day.