In the past, when investors were looking to put all their eggs in the Manhattan basket, they picked SL Green, the biggest office landlord in the borough.
Now, that is changing as the REIT, whose holdings were once made up entirely of Manhattan properties, is making property purchases in other boroughs — and even (gasp!) the suburbs.
The publicly traded company recently bought its first office building in Brooklyn and scooped up some more in Stamford, where it suddenly owns more than 20 percent of the office market.
The company’s portfolio is transitioning because the “core Midtown Manhattan office market is not conducive to a lot of near-term external growth,” said Marc Holliday, CEO of SL Green.
In June, SL Green purchased 1010 Washington Boulevard in Stamford from BPG Properties for $38 million, or $265 per square foot. The 11-story office building, with 143,400 square feet of Class A office space, is across the street from 1055 Washington Boulevard. The latter was part of the $4 billion Reckson Associates portfolio acquisition SL Green completed earlier this year.
The REIT announced that it planned to continue to grow into Stamford’s largest landlord.
“We already have other properties in Stamford with an existing platform and hands-on leasing,” said SL Green managing director Isaac Zion. “We’re looking at pockets where we have an existing presence.”
At the end of June, SL Green also acquired 16 Court Street in Downtown Brooklyn for $107.5 million. The company plans to reposition the 38-story office building, which is Brooklyn’s tallest office tower, as Class A office space.
“Sixteen Court Street represented a unique opportunity for us to establish a presence in Brooklyn at a substantial discount,” said SL Green president and chief investment officer Andrew Mathias. “In addition to office upside, the retail redevelopment opportunity is significant.”
Westchester may be yet another market the REIT will focus on going forward.
Although Manhattan will still be its primary focus, SL Green could profit from other suburban acquisitions in the next five years as near-record rents in Midtown are driving tenants out of the city, according to Zion. “We’re looking for opportunistic and value-added investments in the tri-state area that are near or adjacent to transportation hubs,” said Zion. “It’s something that we’ve always looked at. But the core of our focus is still on Midtown Manhattan and Manhattan in general.”