Crain’s | Daniel Geiger
RXR Realty has bought the long-term lease of 470 Vanderbilt Ave., a large office building near the Barclays Center in Clinton Hill, Brooklyn, paying just under $200 million.
The lease purchase for the 650,000-square-foot former warehouse is one of the biggest acquisitions among a recent wave of activity in the outer boroughs by some of the city’s largest property owners. It comes as competition, and prices have soared to nose-bleed levels for property in Manhattan.
The deal also is another sign that years after Brooklyn became one of the most sought after areas of the city to live, it will also continue to gain in popularity as a place to work—especially among its own growing pool of young residents. The building at 470 Vanderbilt Ave. is across the street from the eastern edge of Atlantic Yards, the site of an ongoing multi-billion dollar residential complex that will eventually be home to thousands of residents.
“470 Vanderbilt is well-positioned to take advantage of the amazing development activity that is occurring all around the building,” said Scott Rechler, RXR Realty’s chief executive in a statement.
RXR Realty had said in recent months that it would acquire as much as $1 billion dollars worth of property in the boroughs. Last summer, it hired Seth Pinsky, the former president of the city’s Economic Development Corporation and a former Crain’s 40 Under 40, to head up that effort.
“With this acquisition, we not only have the opportunity to plug into the creative energy pulsing through the Brooklyn market, but also are taking an important step forward in rolling out our new emerging sub-market initiative,” Mr. Rechler said.
The 10-story property is largely leased. In 2011, GFI Development, the firm that sold the leasehold to RXR Realty in the deal, leased six floors of the building, space totaling about 400,000 square feet, to the city’s Human Resources Administration for 20 years. It was a homerun transaction for a property that for years had struggled to find tenants and sat vacant.
RXR Realty is buying a leasehold that stretches for roughly another 75 years. GFI had purchased that interest in 2007 for a little less than $50 million and then invested over $70 million in renovations at the property during its ownership.
Besides RXR Realty, other large owners have moved into the boroughs, especially Brooklyn. Last year, Jamestown, an Atlanta-based investment firm, bought a large stake in Industry City, a six million square foot office and warehouse complex on the waterfront in Sunset Park.