By Linda O’Flanagan
A plain Jane property netted $30 million in an off-market trade co-ordinated by Cignature Realty founders Lazer Sternhell and Peter Vanderpool.
The 97,000 s/f Garment District building at 256 West 38th Street was purchased by a limited liability company from Chanukka 26, LLC, according to city records. According to Sternhell, the mixed-used building, like its neighbors, has become a hot commodity as investors look to get a foothold in the emerging West Side.
“There is a strong market for these mid-block properties in the Garment District,” said Sternhell.
“The rents are significantly lower in these types of buildings and plenty of leases are being signed. The knock effect is that owners are now upgrading the properties to accommodate that growing office business.”
Where fashion manufacturers once dominated, the broker says smaller office users are moving in.
“New media, mid-sized law firms, design and technology companies, they all are attracted to the district, which is a great location in the heart of midtown with all the transportation options at hand.”
And, as development of the west side moves east further east, “this area will definitely benefit and values should go up.”
Sternhell and Vanderpool have closed over $85 million on deals since launching Cignature Realty in early 2009. The duo specializes in off-market sales, with a focus on the multifamily market, which tend to close faster and avoid potentially costly bidding wars.
“When a deal’s on the market for a while, it gets stale,” said Vanderpool.
The prized sale comes at the Midtown South office market was confirmed as the tightest in Manhattan and one of the tightest in the nation.
This quarter marks the seventh straight quarter the submarket has seen vacancy rates drop in all property classes, according to Jones Lang LaSalle’s Third Quarter Market Report.
The overall vacancy rate dropped to 6.6% in the third quarter of 2011, a decrease of 2.2% from the overall vacancy rate of 6.7% at midyear 2011.
Midtown South’s Class A buildings saw vacancy rates fall to 6.2% this quarter, a drop of 4.9% from the Class A vacancy rate of 6.5% the previous quarter.
The submarket’s Class B vacancy rate dropped to 6.7% in the third quarter of the year, a decrease of 1.3% from the Class B vacancy rate of 6.8% at midyear 2011.
Midtown South average asking rents remained stable in the third quarter, according to JLL, with Class A buildings posting a small decrease in rates. The submarket’s top-end properties recorded rents of $48.05 per square foot in the third quarter of 2011, a decrease of 1.7% from Class A rents of $48.86 per square foot at midyear 2011.
Class B buildings saw rents barely change, rising to $41.89 per square feet this quarter from Class B rates of $41.88 per square foot the previous quarter.