You might say the deal penciled out.
Gaia Real Estate made its largest bet yet on New York City’s rental market, scooping up a converted pencil factory with 117 rental units in Williamsburg.
The fully occupied, six-story building at 55 Hope Street fetched $80 million, according to people familiar with the deal. The seller was Hope Street Capital, which bought the building in 2010 for $17 million, borrowed $38 million and converted it from industrial to residential.
Gaia purchased the building in an off-market deal brokered by Yoav Oelsner and Glenn Tolchin of Upland Property Advisors. The building offers loft-style units with views of Brooklyn and Manhattan from its rooftop terrace. Gaia plans to add a co-working space for tenant use.
Unlike past deals in which Gaia has targeted distressed properties, the Williamsburg play is a bet on New York’s rental market staying strong. At 55 Hope Street, leases signed during an era of Covid-inspired rent concessions are set to turn over.
“We continue to see strong value in submarkets like Williamsburg,” said Gaia CEO Danny Fishman, “where the live-work-play environment is most appealing to the typical post-pandemic young professional.”
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A studio unit at 55 Hope Street of just 460 square feet was leased this month after listing for $3,500, and a 790-square-foot unit listed at $5,000 also rented, according to StreetEasy. Actual prices renters pay are not public.
Fishman also sees upside in the building’s retail space because “work-from-home trends have encouraged consumers to abandon traditional midtown shopping districts for local boutiques and restaurants,” he said.
Gaia, having sold its Sun Belt investments after the pandemic supercharged regional real estate markets, sees a less frenzied atmosphere in New York. The company said Hope Street is its eighth acquisition in the past 12 months.
Prior purchases include $34.8 million for 56 rental units on the Lower East Side and $50 million one year ago for a distressed East Village property.