By Daniel Geiger
A team from the real estate services firm Newmark Knight Frank has arranged the sale of two more commercial condominiums at the downtown office building 40 Rector Street.
The Urban Justice Center, a non-profit group, and RVM, a litigation support company, each are in contract to purchase a floor in the roughly 600,000 s/f building.
Floors in the 19-story property are a little over 30,000 s/f apiece. Pricing on the deals wasn’t known by press time, but space in the building recently traded for between $250-$300 per s/f, meaning a floor would likely sell for around $8 or $9 million. Philips International, a group that has converted several office buildings in the city from rental into condo space, has overseen the project.
In recent months, the Council of School Supervisors and Administrators purchased the building’s 12th floor for around $8 million in what was the first sale at the property.
Office condos appeal to nonprofit users because they are exempt from paying real estate taxes. By buying space, these types of tenants can benefit from the exemption but if they rent, they bear cost of the tax because it is built into the price of the lease. As the deal with RVM shows however, for-profit tenants too have been drawn to condo space, in part because Manhattan prices are still below their peaks before the recession.
A team from Newmark Knight Frank led by Scott Klau, an executive at the firm, is marketing the space at 40 Rector. Klau and his team have worked with Philips before, on an East Side building the firm converted on Second Avenue and also a 110 East 40th Street, a 100,000 s/f property that he said has appealed to medical users.
Klau also handles agency leasing work. He is part of a Newmark team that handles dealmaking at 885 Third Avenue, better known as the Lipstick Building.
There Klau is partnered with top Newmark executives Mark Weiss and Billy Cohen. The trio won the assignment last year when a partnership between the investment firms IRSA and Marciano Investment bought the building out of distress.
Klau and his colleagues have overseen the conversion of the building’s 16,000 s/f 26th floor into four roughly equally sized prebuilt office units. He said that the spaces were constructed with high end installations and called 885 Third a trophy that could lure tenants who would normally take space on Park Avenue.
Klau said the team hopes to have the space leased by the end of the year. Asking rents for the units are in the $70s per s/f. The 33rd floor in the 34-story building is also available for rents in the $80s per s/f and Klau said that the team is looking to lease that space to a single user.
“We’re really excited with the activity we’re getting at the property,” Klau said.
