While most investors are avoiding Class B offices like the plague, Jack Elo is going against the tide.
Elo Organization is in contract to buy the 1920s office building at 21 West 46th Street. Elo declined to disclose the price of the 15-story property but said it is fully occupied and he plans to keep it as an office.
“Midtown is a good location,” Elo said. “You don’t need a reason to buy a property in the Midtown area.”
The property joins Elo’s large office portfolio that includes properties in the nearby Diamond and Garment districts. Elo bought Eli and Isaac Chetrit’s Diamond District building at 15 West 47th Street for $110 million in December 2020. Elo also owns the office building at 151 West 46th Street, property records show.
Elo sold a Gowanus development site this week to developer Yitzchok Katz for $22 million. It’s unclear if the deal would qualify for a 1031 exchange, which would allow Elo to defer capital gains taxes on his Brooklyn assemblage.
Arline Hannon-Weinmann, the owner of 21 West 46th Street, did not respond to a request for comment. Her family has owned the building since 1967, according to property records. There does not appear to be a mortgage on the property.
Gary Barnett’s Extell purchased air rights from the Weinmanns for $1.3 million in 2008, according to property records. The building is on the same block as Extell’s planned 32-story Fifth Avenue tower.
Coworking company WorkHouse occupies 15,000 square feet of the building and is the largest tenant, according to CoStar. Other tenants include jewelry distributor YGI Group and digital marketing firm House of Kaizen.
The value of Class B and C buildings has tanked in recent years because of high interest rates and remote work. Some owners are choosing to sell at a discount to prior values rather than go down the road of distress and troublesome refinancing. Some buyers are taking advantage of low prices.
Brokers, meanwhile, have described a window of opportunity as mortgages on older buildings come due and interest rates stabilize.
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