The $112M warehouse transaction that wasn’t

Sitex will renovate Glendale buildings, look for last-mile tenants

67-25 Otto Road and Silex CEO Wes Sights (Google Maps, iStock)
67-25 Otto Road and Silex CEO Wes Sights (Google Maps, iStock)

After public records led to reports that three industrial spaces in Queens sold for $112 million, the supposed seller says no such transaction took place.

“There was no sale,” said Brian Milberg, senior partner at Sitex, a New Jersey private equity firm that buys and sells industrial property. “We’re looking to hold onto this property for years to come.”

Instead of selling, Sitex said, it bought out the leases of tenants at 66-31, 66-35 and 67-25 Otto Road, which it had inherited upon purchasing the Glendale properties for $36 million early last year.

As for the supposed buyer, Milberg says international logistics investor GLP was an equity partner in the project from the start, and that the properties were simply moved to a different fund in a shared investment portfolio.

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Following the buyout, the properties were marked to market, meaning the value was reevaluated in light of there no longer being leases on the warehouses. The $112 million figure recorded in public records represents the assessed value of the properties without the leases.

Current tenants include the Advance Group, a moving company that specializes in office relocations; and Arenson Furniture, a furniture distributor whose space is being used as a prop house, according to its warehouse manager.

Milberg said tenants will vacate by the end of the year.

Sitex plans on making improvements to the buildings — including renovating the offices, installing new roofs and energy-efficient lighting, and repainting the interior — while it searches for a new tenant.

Located on a New York & Atlantic Railway line, the buildings can be outfitted for railcar entry, but Milberg said he has not seen demand for that. E-commerce companies, though, could be interested.

“We think this is a great last-mile location and our goal is to own it for the long term,” Milberg said, adding that food and beverage deliverers would be a good fit. “Everyone wants Amazon, but they’re not the only game in town.”

Since the onset of the pandemic, New Yorkers have prepared more meals at home, and many have turned to grocery delivery services. This trend may continue, if not quite as dramatically, as working from home persists and consumers grow comfortable with having food delivered.

Grocery store sales jumped 77 percent in March and remained above average through April.

Even before Covid-19, industrial space had become a hot commodity as e-commerce sellers sought space to store goods to ship them ever faster to customers’ homes.

In Queens the average sale price per square foot of warehouse space increased 93 percent from 2014 to 2020, rising from $426 to $823. The boom even drew would-be Manhattan financiers.