Metropolitan Realty Associates (MRA) and its long-time joint-venture equity partner, Angelo, Gordon & Co., LP (Angelo, Gordon), have listed the award-winning Garden City Square complex at 711 Stewart Ave. in Garden City for sale, it was announced today. The complex, comprising approximately 176,000 square feet of retail space and 117,000 square feet of office and medical office space, has been subdivided into three separate condominium units.
The retail portion of the 293,500-square-foot retail and medical arts development is 100 percent leased to two tenants. BJ’s Wholesale Club will begin paying rent in November 2012 on its 121,000-square-foot space, leased on a 20-year term. LA Fitness is expected to take occupancy of its 55,000-square-foot space next May for a 15-year term. Upon sale, each tenant will be at the beginning of their respective lease terms, which gives a buyer the opportunity to collect rent for the entire lease period on both retail spaces.
Jeffrey Dunne, head of CBRE’s New York Institutional Group, leads the team that is marketing the property for sale in its entirety or in parts.
“This is a tremendous opportunity for an investor to acquire an irreplaceable asset, adjacent to one of the largest malls in the country and geographically situated among a housing market with top-tier per capita income,” said Joseph A. Farkas, president of Jericho-based MRA. “These high-quality, high credit retailers and medical users have committed to Garden City Square on a long-term basis, ensuring that this property will generate a consistent and reliable rental income for many years.”
Construction of the two-story space that will house LA Fitness kicked off this month, marking the final component of a $35 million renovation and repositioning program that MRA is executing at Garden City Square. The 17-acre project is within one of the nation’s densest retail clusters, with more than six million square feet of shopping space within a 1.5-mile radius.
Easily accessible from the Meadowbrook Parkway, the project is adjacent to Roosevelt Field Mall, one of the largest shopping malls in the nation. Roosevelt Field Mall is slated for a massive redevelopment by mall owner Simon Property Group, and recently signed a lease with Neiman Marcus store for its only location on Long Island.
The medical arts portion of Garden City Square is 58 percent occupied, creating an opportunity for an investor to increase its rental income stream through lease up and or continue to subdivide the property and sell off as commercial/medical condominiums.
Current medical tenants at Garden City Square include NRAD Medical Associates PC, Endoscopy Center of Long Island, and Cardiovascular Medical Associates. In general, the capital that medical companies invest in their practices—including furniture, equipment and special licensing and permitting for the operation of their leased offices—tends to make them renew leases at the end of the term rather than move to a new space, and some choose to purchase their current suites. This is a trait that will add to Garden City Square’s appeal to potential investors, according to Farkas.
“We acquired this project because we saw an opportunity to add value by improving and expanding the medical office uses already at the property,” Farkas said. “The retail component, which turned out to be a home run in its own right, was rather straight forward given its close proximity to the mall.
Richard Karson of CBRE heads the exclusive leasing team for Garden City Square, working with Robert Seidenberg, Greg Carlin and David Zelinski.
MRA and partner, Angelo, Gordon, acquired the property in May 2010. As part of its repositioning and renovation, MRA successfully negotiated a 10-year PILOT (Payment in Lieu of Taxes) agreement with the Town of Hempstead Industrial Agency where real estate tax benefits help lower tenants’ initial costs of occupancy. This benefit helped the company attract both LA Fitness and BJ’s Wholesale Club and the PILOT can be transferred onto new ownership.
The site originally served as a manufacturing facility. In 1984, developers converted the property into a mixed-use commercial facility including office, retail and medical office tenancies.