Aim low. That’s not normally the advice commercial brokerages take to economic heart in New York.
But one Manhattan brokerage has partnered with a real estate investment adviser to do just that – aim for the low-slung buildings, the non-Class A space dotting the city. Brokerage Colliers ABR recently announced a partnership with Boston-based AEW Capital Management to buy as much as $300 million in mostly Class B office and retail space throughout the metro area. About a week after the announcement, the venture closed its first purchase, buying a 156,000-square-foot office building at 229 West 28th Street for $35.5 million.
The venture will welcome risk in its investment properties, with an eye toward turning each around within three to five years of purchase. “We’re not a cash-flow investor per se,” Anthony McElroy, Colliers ABR’s managing director for acquisitions, told The Real Deal. “We’re sort of looking for the exit.”
The 12-story, loft-style 229 West 28th Street purchase is a telling example of the venture’s investment plans. It has a good location – near Penn Station and the future Moynihan Station transit hub – and it has tenants now paying below-market rents. Plus, it was essentially an off-market deal, McElroy said, with the potential for a re-leasing at market-rate rents. A large block of space, he added, will be available within the next several months. Other deals are pending, McElroy said in late December, and they could be cut in Brooklyn and Queens, in particular, and as far afield as Westchester.