Harlem River of the Bronx andManhattan in New York City.

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NEW YORK CITY –In the South Bronx,  a wave ofdevelopment is sweeping over the Mott Haven submarket and for goodreason, as it is one of the closest Opportunity Zones to Manhattan.And institutional investors are rushing in to break ground onretail, community facility, and residential-focused developments.But not ZG Capital Partners, the development firm see's a greatopportunity in the submarket to roll-out creative office for alive-work-play feel, James Tamborlane, partner at the firm tellsGlobeSt.com.

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"There's a big driver to move to the outer boroughs and rent ismuch more affordable," Tamborlane said. "As the submarket grows andgrows,  rents will grow with it. It's a good time in themarket place to invest when there's growth to be had and be at theforefront of development."

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ZG Capital is a partnership between Bobby Zar of the Zar Groupand James Tamborlane formerly of MHP Real Estate Services. The pairjust purchased the Bruckner Building for $65M, an eight-story,188,000-square-foot property comprised of commercial lofts at 2417Third Ave. in the Bronx. The venture secured an estimated $45million of financing from Ladder Capital.

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The property is the first for the venture who plans to go boldlyinto the Bronx to acquire and reposition office, industrial andmixed-use buildings, including in Manhattan and the outer-boroughs,viewing those submarkets as an opportunity to capitalize of REAPbenefits of the Relocation and Employment Assistance Program. Theprogram offers businesses income tax credits for relocating jobsbelow 96th Street in Manhattan to designated locations, or above96th Street and in one of the other four boroughs.

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"With almost 20 years at MHP and Bobby's expertise in creativelyrepositioning properties into stong assets like the office buildingat 1450 Broadway in Times Square, we thought to join forces tocreate a new venture with the goal of buying office buildings toreposition for creative office going forward," Tamborlane said.

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There is a bunch of development in the Bronx submarket as ofcurrent. With Brookfield's mixed-use development dubbed theBankside as one of the largest properties crowning the submarket,and where 2417 Third Ave. sits adjacent.

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Many of the players are large institutional developers,investing in the South Bronx because of its subway access, bridgesconnecting across the river to Manhattan, and is one of the closestOpportunity Zones to Manhattan. Cushman & Wakefield arrangedthe financing for ZG Capital's new office at 2417 Third Ave. andtestify's that the market is lit up with investor excitement.

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According to Gideon Gil, of the firm's equity, debt &structured finance team, the property has a lot of upside, whichmade more sense to procure a floating rate loan to secure even moreproceeds in three to five years. "Lenders liked the story. Everylender we brought out to the property witnessed the asset andpartnership and looked at all that's happening with residential andtransportation nearby, it made it compelling for lenders," Giltells GlobeSt.com.

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Mariah Brown

Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.