DivcoWest Plants Flag in Midtown South

NEW YORK CITY-DivcoWest has made its first acquisitions here, buying a trio of Midtown South office properties in a partnership with locally based Brickman. The purchase price for 24-28 W. 25th St. and 40 W. 25th St. in an acquisition from Einstein College at Yeshiva University was not disclosed; market sources put it at nearly $114 million, or about $420 per square foot. A spokesman for the university told the Wall Street Journal Sunday that proceeds from the sale would go to fund biomedical research.

The properties were acquired for the $870-million DivcoWest Fund III and the $200-million Brickman Fund V. Both were raised in 2011. A Colliers International team of James Murphy and Margaret O'Keeffe represented the university in the sale.

In a release, the partners make it clear that they've set their sights on Midtown South's flourishing tech sector. The century-old properties offer floorplates averaging 11,000 square feet as well as access to specialized intellectual capital, both conducive to the requirements of smaller tech-oriented tenants. DivcoWest and Brickman have followed similar patterns with buildings they own in such tech-friendly markets as San Francisco, Seattle, Boston and Austin, TX.

“We consider these buildings to be a strategic expansion of the creative space options we need to properly accommodate the national growth now happening within many of our existing tenants around the country,” San Francisco-based DivcoWest's CEO, Stuart Shiff, says in the release. “That would definitely include West Coast based firms that are looking for the 'right' urban locations for immediate expansion into the New York Metro market.”

Totaling about 270,000 square feet, the three properties are currently 73% leased. It's not clear whether the new owners plan to reposition the properties, or what brokerage firm they're hiring to lease up the three 25th Street assets.