By Daniel Geiger
The Zar Group has closed on its purchase of 1450 Broadway, the company announced on Wednesday. The firm, formerly known as Zar City, paid $204 million for the 400,000 s/f office property, which is located in Times Square on the corner of 41st Street.
A partnership between the real estate investors Joe Moinian, Joe Chetrit, and Ed Minksoff were the sellers in the deal. Real Estate Weekly first reported the sale in April.
Avi Zukerman, the director of acquisitions at the Zar Group, said that the purchase equated to a 5.5% initial cap rate, a somewhat higher rate of return than other recent purchases of commercial office buildings in Manhattan. Some deals according to market experts and written reports have traded at sub 5% cap rates because of the lack of buying opportunities and the pressure that shortage has put on pricing.
Zukerman said that about 60,000 s/f of space was available in the building, most of it scattered in pockets throughout the 42-story property. Zukerman said that The Zar Group primarily saw upside in leasing space higher in the building. The uppermost floors in 1450 Broadway are about 4,000 s/f each, and Zukerman said that after renovations to the property, the company would seek rents in the high $50s per s/f for those spaces, more than what the floors have commanded in the past.
“We are going to make improvements to the building, to the lobby and facade,” Zukerman said.
The French fasion label BCBG is one of the building’s biggest tenants along with the apparel company Iconix Brand Group. Zukerman said that few leases among the building’s existing roster of tenants are due to roll over in the near term and described the property as a chance to try to capitalize on the rising rental market without taking on too much vacancy exposure in the process.