After nearly a decade on the sidelines — Olmstead Properties is getting back on offense. The office manager has acquired two buildings in Manhattan's Flatiron District for a total of $104 million, according to a report from the Commercial Observer.
To support the deal for properties 381 Park Avenue South and 373 Park Avenue South, Bank of New York is providing $81 million in acquisition financing.
ATCO Properties & Management sold the properties, with Newmark brokering the deal. Empire Capital will retain minority equity control in the buildings.
This marks Olmstead's first acquisitions since 2016, with the firm set to close on another purchase soon, but no other details were provided, the CO further reported. Now was the right time for Olmstead to act, thanks to the improving market conditions.
“About two years ago, we started to see leasing fundamentals coming back a little bit, and asking if we should be looking to do acquisitions,” Patrick Pavone, Olmstead's director of acquisitions, told CO.
“Sales pricing was very low, and a lot of names that you would never think you’d see in the news were giving back buildings. So, we started studying the market, re-engaging with the market, and then we spent the last 18 months to two years gearing up to go on a buying spree.”
Speaking of leasing, Manhattan's office market overall has been resilient, with year-to-date activity through October surging by 38 percent from the same period last year to 26.03 million square feet, according to a November report from CBRE. Additionally, Transwestern separately said that sublease space fell below pre-pandemic levels to 11.8 million square feet, as of November 1.
The 381 Park Avenue building stands 228,000 square feet, while 373 Park Avenue spans 110,000 square feet. The two sister boutique office properties were constructed in the early 1900s. Olmstead plans to renovate both properties by upgrading lobbies, bathrooms, elevator cabs and common areas.
According to Olmstead, it operates more than 30 "income-producing" assets, spanning roughly 4.5 million square feet.
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