Deal Closed: Madison Ave NYC Upper East Retail Corridor
Recently put a deal together on Madison Ave in the Upper East Side retail corridor. The corner property was delivered with vacant retail and occupied boutique office space above. The unique situation presented itself after the ownership decided to part ways with the break-even/ negative cash flow property. The taxes on the 9000sqft building were north of $700k and represented a majority of the expenses. As the ownership lived off the distributions of the property, they were willing to entertain a sale. As the property changed hands, this allowed for the taxes to be greatly reduced for the buying entity, relieving the buyer of some addition expenses. Additionally, the buyers were able to negotiate and sign a contract within 2 weeks. The price per square foot represented a sharp decline from similar comps. Buyers strategy is a long-term hold, anticipating the retail corridor will bounce back. 

Deals are happening! Keep your heads up folks, can’t wait to hear your success stories!
[{"id": "gmy5jtu", "text": "Good job. keep making it rain", "replies": [], "depth": 1}, {"id": "gmy8pc0", "text": "Hey what does your TI cost look like for the vacant / what are you UW for new rents on the retail?", "replies": [{"id": "gmyggjh", "text": "For the retail space $2M, another $2M for the rest of the building. Marketing the rent on retail at $400/psf and UW $350 on the deal. Current rents are approx on average $700/psf for the area. Given the state of the market they want to lease up for a short term and then get fair market when the rent bounce back.", "replies": [{"id": "gmyki85", "text": "How market vacancy look for retail? Have been chasing some multi deals in the city but HATE the ground floor retail on these things, have no idea how to conservatively UW it", "replies": [{"id": "gmyqfhr", "text": "Retails tricky. Varies from place to place in the city.", "replies": [{"id": "gmyzxt4", "text": "I think what gets me is that some of these retail owners have like zero basis on the deals so they can like give away rent in a building their family has owned since like 1920. I just can\u2019t get comfortable with it personally (but I also hate retail generally, so there\u2019s that too)", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "gn07tyy", "text": "Wait so is the retail TI/LC like $600 PSF? Is that mostly LL work? Guess I\u2019m just trying to figure out how retail build ours work in NYC, is it all turnkey, white box with allowance, something else?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gmy9yes", "text": "Was this a 1031 Exchange?", "replies": [{"id": "gmyghin", "text": "No", "replies": [], "depth": 2}], "depth": 1}, {"id": "gmyygez", "text": "How did the taxes reduce? Very curious.", "replies": [{"id": "gmziqk3", "text": "The taxes get reassessed on the sale. Additionally, a few attorneys have been fighting the taxes because they were being charged based off the income of the property at the height of the market.", "replies": [{"id": "gmzucmi", "text": "Nice! Haven\u2019t seen them go down but now I know they can.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gmzlkku", "text": "Nice! Congrats. What was the cap rate on the office income?", "replies": [{"id": "gn04y07", "text": "The cap rate was very low, given the retail was vacant and the high taxes. Less than a 2 cap. Obviously once the tax reduction kicks in and the retail gets rented it will shoot up considerably. This was one of those deals where if I could\u2019ve put a few bucks in I would\u2019ve love to.", "replies": [{"id": "gn1h0po", "text": "Awesome, keep killing it!", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gn0365s", "text": "I\u2019m on the legal side but I\u2019m as busy as I\u2019ve ever been.  There are definitely deals happening.", "replies": [], "depth": 1}, {"id": "gn0baeb", "text": "How frequently can you buy something in Manhattan.  Is it less common than in other markets or is it pretty rare?  It seems like most of the stuff is leasehold interest only.", "replies": [{"id": "gn1eus7", "text": "Tenants stay the same but buildings change ownership from time to time.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gn0muxn", "text": "cross streets?", "replies": [], "depth": 1}, {"id": "gn0qeaj", "text": "Congrats man. Trading paper currently at world trade. It feels goooooooooooood", "replies": [], "depth": 1}, {"id": "gn0rydk", "text": "Hi guys I am new in this community. Currently working in product management for a robo advisor and want out and into Commercial Real Estate.  I see a listing at JLL in Miami as a Capital Markets analyst and also see some jobs to join team of brokers in Manhattan. Any thoughts on what I should do? I\u2019m only 24. Thx", "replies": [{"id": "gn0zbrt", "text": "If you want to get into commercial real estate you should speak with someone directly in the industry. Ask them all your questions. Be prepared to not make money for a while. Learn your market, the buyers, the seller, market rents, everything. I never worked with one of the big shops, I know they have their pros and cons like anywhere else. If you want shoot me a message. Good luck!", "replies": [{"id": "gn21ejx", "text": "Hey man I really appreciate you taking the time to respond.  If you don\u2019t mind, I might send a DM and pose some additional questions about the industry!\n\nCheers", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gneoq1b", "text": "How did the taxes get lowered?", "replies": [], "depth": 1}]