Mount Sinai St. Luke’s has closed on the sale of its St. Luke’s Pavilion Portfolio in Morningside Heights to Delshah Capital.
The five building portfolio sold for $111.5 million, or $543 per square foot.
The properties span nearly half a city block along Morningside Drive between West 113 & West 114th Streets with addresses located at 401 West & 411 West 113th Street and 400 West & 408 West 114th Street in Manhattan’s Morningside Heights.
Delshah is planning to convert the property to 199 luxury rental apartments across 201,481 rentable square feet and 3,776 s/f of community facility space.
Cushman & Wakefield’s Paul Massey, Hall Oster, Teddy Galligan and Andrew Berry exclusively handled the transaction on behalf of Mount Sinai.
“The proceeds of the sale of the Pavilion buildings enable the hospital to continue reinvest in its core facilities and the neighborhood will benefit from enhanced healthcare service. The purchaser will have the opportunity to repurpose a substantial and distinct portfolio in one of New York City’s most supply constrained markets,” said Massey.
“It’s very rare to have such a large parcel come to market in the neighborhood and it will be very exciting to see how the transition to residential contributes to the vibrancy of the area,” added Oster.
The portfolio includes five of the original ten buildings constructed for the St. Luke’s Hospital’s Morningside Heights Campus at the turn of the 20th Century which are the Plant, Scrymser, Minturn, and Travers Pavilions, and a two-story interior carriage house once home to horse-drawn ambulances.
The adjacent pre-war pavilion buildings form a cruciform with large center courtyard and possess a combined 200 ft. of frontage overlooking Morningside Park.
In their present state, the buildings stand between six and nine stories tall featuring large floor plates, high ceilings, full basements and windows throughout.
The buildings formerly housed numerous hospital services that are in the process of being relocated to alternate space within the remainder of the campus.
The sale comes as New York’s medical landscape undergoes a dramatic shift as hospitals reconfigure their facilities to meet changing needs.
Last month, Beth Israel, which has been open since 1929, announced it will sell its Union Square building on 16th Street and First Avenue as part of a major reconfiguration to create small, hyper-local facilities
As a panel in Brooklyn earlier this month, former mayoral candidate Joe Lhota, who is now the senior vice president, vice dean, and chief of staff at NYU Langone Medical Center, pointed to a 2006 report from The Berger Commission recommending the state close nine hospitals and reconfigure 48 others.
The report stated the reason for the closures and reconfigurations was an “unacceptably high excess capacity” of hospital beds, which they estimated at more than 10,000 hospital beds. Most significantly, the report noted that the statewide hospital occupancy rate had fallen from 83 percent of certified beds in 1983 to 65 percent in 2004.
“These declining occupancy rates are driven in part by significant changes in where and how people get medical care,” read the report.
Fast forward ten years, and the story remains the same — how and where people get medical care has changed significantly, and that’s mainly due to the advancement of healthcare technology.
“The healthcare industry needs to explain what’s going on, and elected officials need to understand that a bed isn’t the thing that it used to be,” Lhota told the panel hosted by TerraCRG.