Garment Center Assets Should Pull $55M on Bid

NEW YORK CITY-Two Garment Center buildings are on the block today carrying a combined value of $55 million. The two buildings–256 W. 38th St. and 252 W. 37th St.–are owned by private investors looking to shed non-core assets.

The two properties are fully leased, but according to the Newmark Knight Frank brokers handling the sale, senior managing director Ken Zakin and associate Randall Liberman, a majority of the leases are set to expire in the medium term. At the 104,350-sf 256, “50% will roll by the end of next year,” says Zakin, characterizing the tenants as “month-to-month or short-term.”

Liberman describes 252 as the upper-scale of the two assets, featuring “more office and showroom space in addition to manufacturing. Leases in the 148,766-foot building will roll in the next three to four years.

The buildings are being sold on a bid basis and will move as a package or individually. Zakin estimates the all-in value of the pair at roughly $55 million.

The potential for retenanting can raise per-sf rents from the current mid-teens to the $20 or $25 per foot typical of the area. That might be conservative if a movement to rezone the area comes about in future months. Currently the Special District of the Garment Center calls for 50% of the space to be earmarked for manufacturing, and both buildings stand squarely within the district.

Lifting of the restriction would fast-track the area’s gentrification as well as the two buildings’ earnings power.

“From statistics we’ve seen,” says Zakin, “there is more space available in the Garment Center than there are jobs. With demand for housing and for showroom and office space being so high, the zoning change can increase that upside substantially.” Admittedly, he adds, “someone is going to have to work these buildings.”

While the NKF duo were mum on the identity of the current owner, sources familiar with the assets tell GlobeSt.com that the current ownership is a family looking to shed what the next generation have deemed non-core assets.