The most unsightly building in Greenwich Village, if not the world, is getting a facelift.
KPG Funds scored $34.5 million in financing from Thorofare to convert the moribund, seven-story structure at 132 West 14th Street into a modern Class A office and retail building, according to KPG.
“We are tearing up everything from the bottom up,” said Rod Kritsberg, co-founder of KPG Funds. “Right now it’s probably the world’s ugliest building.”
KPG signed a 99-year ground lease with the Salvation Army, which owns but no longer uses the property, in August 2021 for $22.1 million, according to records.
The lease is relatively cheap because the renovation costs are not. The entire project will cost about $55 million, according to Kritsberg. It will require demolition of the front and back facades along with new steel structures.
The facade was initially cast iron, similar to buildings in Soho, but at some point the building’s owner “cheaped out” and put a concrete facade over it, Kritsberg said. The revamped building, which KPG has dubbed Le’ Galeries, will have a sleek, glass front.
Unlike some nearby buildings, 132 West 14th Street is not landmarked. This allows KPG to begin renovating without getting approval from the Landmarks Preservation Commission, a cumbersome process.
KPG is also planning to expand the ceiling height of the top two floors by 15 feet and add a roof deck. Asking rents are expected to be north of $90 per square foot.
The firm has tapped Marvel Architects for the project. JLL’s Aaron Niedermayer arranged the financing.
KPG is making an intriguing bet on the New York City office market. The developer, led by Gregory Kraut and Kritsberg, is converting aging Class B and Class C buildings into high-end boutique office buildings. It is focused on trendy areas such as Soho, Tribeca or Greenwich Village where high-end office supply is limited.
Kritsberg said that all but one of its buildings are 100 percent leased.
The market’s future, however, remains a question mark. The vacancy rate in Manhattan for the second quarter was 17.2 percent, according to Colliers. A recent report by NYU and Columbia University researchers said that by 2029, the city’s office stock will fall in value by 28 percent, or $49 billion, largely because of remote work.
Prices on some Midtown office buildings have dropped significantly. Blackstone and RFR recently sold a 40-story office building at 1330 Sixth Avenue for $320 million, 20 percent below the $400 million that RFR paid for it in 2010.