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NEW YORK CITY-A residential/retail loft building at 126-130 Orchard St., situated between Delancey and Rivington streets, is on the market for sale with an asking price of nearly $23.3 million.

Eastern Consolidated’s executive director Stuart Gross, with senior director Deborah Gutoff, are marketing the fully occupied, completely renovated property. According to Eastern, the building would serve as an ideal 1031 exchange candidate, since minimal maintenance and management is required, providing significant future upside.

Gutoff tells GlobeSt.com that the seller is the Velum Corp., a single asset entity owned by a local investment group. “The owner believes the property’s highest value will be realized in its condominium conversion potential,” she says, “but due to tax considerations, has decided to sell in order to receive advantageous long term capital gains treatment versus the ordinary income that it would derive from undertaking the conversion process itself.

Eastern also explains that offshore investors could find this property enticing for the same reasons using the benefit of their strong currency. “All of the residential units were completely renovated in 2002,” Gross explains. “The existing J-51 tax abatement was secured in connection with the renovation of the property in 2002 for a 15-year period which expires in 2017. While the units are technically stabilized, there is no practical restriction imposed since the legal rents are substantially in excess of the current preferential rents. Therefore, a new owner will enjoy the benefits of the J-51 tax abatement while raising rents to the legal limit as fast as the market will bear.”

The residential units themselves feature soaring ceilings as high as 20 feet with large open layouts. The two penthouse floor units include extensive roof gardens with views of lower Manhattan. The property is situated in the heart of the historic Lower East Side, which is enjoying a major renaissance, according to Eastern.

“The retail rents are significantly under market,” Gutoff says, adding that they currently average $68 per sf. “But since their leases all expire within the next two years, the new owner will be able to increase rates as much as 40%, to $115-125 per sf at present market rates.”

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