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NEW YORK CITY-In one of the year’s biggest retail transactions locally, Volkswagen Group of America is acquiring the Potamkin General Motors building and auto dealership at 798-804 Eleventh Ave. for $125 million. The 265,000-square-foot space will be the flagship New York City dealerships for Audi and Volkswagen, according to CB Richard Ellis, which represented the automaker in the deal.

VW laid out $84 million to buy the property and will invest another $41 million in renovations. The acquisition puts the two brands along the so-called “auto sales Autobahn” of Eleventh Avenue, already home to high-profile Mercedes-Benz, Lexus, BMW and Toyota dealerships.

“Volkswagen Group engaged CBRE in the search for a flagship Manhattan site back in February 2007, and identifying opportunities on Eleventh Avenue, which eventually stood out as a preferred location, was extremely challenging,” says CBRE EVP Jedd Nero in a release. “However, Volkswagen was committed to its strategic plan to grow in the US market and the Potamkin site ended up fitting perfectly into their business and marketing plan in New York.”

Nero adds that the CBRE team undertook “an enormously complex and detailed financial analysis” of every potential Manhattan site in Manhattan to determine not only the best location, but also whether VW’s best option was to lease or purchase the space. “Among the obstacles we had to overcome were the needs of the two distinct brands, Volkswagen and Audi, the changing environment in the auto industry and Potamkin having to work out its side of the equation in order to make our deal work for them,” he says. Potamkin’s other Manhattan location is an auto mall in Harlem that opened in 2003.

The current Potamkin GM dealership, which underwent a $10-million renovation in 2001, and 2003, will be “recreated from the inside out, leading to specific efficiencies and an extraordinary Volkswagen and Audi brand experience, with two distinct, cutting-edge architectural experiences, says Detroit-based CBRE VP Lauren Scarpace in a release. Along with Nero and Scarpace the CBRE team included New York City-based Michael Kadosh, a senior associate; and Detroit-based first VP Paul Beitz, VP Allen Dresselhouse and Tim Luke, alliance director for the VW account.

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