American Realty Capitalizes on Garment Center Trend

NEW YORK CITY-The Garment District is getting renewed attention of late as price-sensitive tenants are giving the area a look. American Realty Capital New York Recovery REIT Inc. is aware of the trend, too, and recently purchased its second building there in as many weeks. The most recent deal is a $65-million agreement to acquire the fee simple interest in 14-story, 149,000-square foot office building at 229 W. 36th Street. Michael A. Happel, chief investment officer for the company, tells GlobeSt.com that the Garment District offers significant transportation and entertainment advantages due to its proximity to Penn Station and Madison Square Garden.

“In the surrounding neighborhoods, rents are going up and because of that tenants who are price sensitive are starting to come into the Garment District to look and it’s putting upward pressure on area rents,” Happel says. “Just south of here, in Midtown South, 10 years ago, rents averaged $35 a square foot. Today, they average $66, so it’s close to doubled in 10 years. In the Garment District, our rents are around $35 per square foot. It’s a cheaper alternative and we think it’s the beginning of a longer-term transformation of the area.”