Gazit Horizons Acquires The Edge Retail Complex in Brooklyn

NEW YORK CITY—Gazit-Globe through its subsidiary, Gazit Horizons, acquired The Edge Retail, a 60,000 square-foot retail condominium complex in Williamsburg, Brooklyn for $47.3 million or $790 per square foot. Madison Marquette had purchased The Edge Retail for $45.5 million in 2014. The asset is the retail component of the Edge Condominiums built by Jeffrey Levine’s Douglaston Development. The 900-unit luxury condos have a 500-car parking garage and 1.75 acres of open space and are close to a New York City ferry terminal.

The Edge Retail comprises four buildings, extending for two blocks along Kent Avenue, between North 4th and North 6th streets. Anchored by a CVS Pharmacy and Brooklyn Harvest market, the retail space is 81% leased.

The property is close to the East River State Park, where Smorgasburg, which advertises itself as the largest open-air food market in the country, opens every Saturday. Combined with its Sunday hours in Prospect Park, Smorgaburg says it attracts 20,000 to 30,000 visitors to Brooklyn each weekend.

“We have been tracking Williamsburg for some time, and believe that The Edge is the ideal combination of location, tenancy and attractive basis for our business model,” says Jeff Mooallem, CEO of Gazit Horizons. He states that within a quarter mile of the project, population has grown by 75% in the past decade, with average household incomes reaching over $160,000.

He notes several notable projects are under construction to the north and south of the complex. “So, we believe Williamsburg’s waterfront expansion will continue and The Edge will benefit from additional growth in population, in office workers, and in ferry ridership. Adding this property to our New York City portfolio makes a ton of sense.”

This is Gazit’s second retail acquisition in Brooklyn and the third in New York City. In June, Gazit in a joint venture acquired an approximately $40 million leasehold interest in Ceasar’s Bay Bazaar. The mall is on 14 acres of Brooklyn waterfront property, slightly south of Bensonhurst Park. The real estate firm also purchased for $73.3 million the retail condominium at 401 E. 60th St. on First Avenue. This structure houses the Upper East Side’s Bed, Bath & Beyond.

Mooallem tells GlobeSt.com that the Brooklyn retail properties are distinguishable not only by their locations but also due to what they offer and whom they serve. “The Edge Retail is focused on neighborhood convenience, a grocery store, pharmacy in an urban center. It’s for local service.” He contrasts this with the Ceaser’s Bay mall, which is 300,000 square feet. Due to its location and proximity to the highway, ample parking and the types of retail tenants such Best Buy and Kohl’s, the mall draws people shopping with a different purpose.

Mooallem notes that Gazit’s latest acquisition is not high-end luxury retail but caters to a younger, populous demographic. With this attractive price-per-square-foot waterfront property, he’s confident of adding value over time.

Although retail has experienced brick-and-mortar challenges in recent year, Mooallem emphasizes considering the landscape on a macro versus micro level. “If viewed on a macro level, retail looks bad across the country. But if we view it on a micro-level, there are opportunities where the demand exceeds the supply and those are the areas where we hope to invest.”

With US offices in New York, Miami and Boston, the firm is continuing with its plans to invest $2 billion through 2022.

HFF’s Andrew Scandalios and Rob Rizzi represented the seller, Madison Marquette, in the transaction.