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This Year, Manhattan's Chelsea Neighborhood is No Stranger to Plush Price Tags

Normandy Partners, L&L Holding Spending Nearly $1B for Terminal Stores Warehouse
August 1, 2018
Raking in another eye-widening commercial real estate deal this year, the Chelsea area is increasingly becoming home to billion-dollar transactions.

New York City-based developer L & L Holding is teaming up with Morristown, NJ-based Normandy Real Estate Partners in signing a contract to acquire the Terminal Stores warehouse, according to media reports. The joint-venture team is said to have acquired the real estate investment manager GreekOak Real Estate Advisors and owner Waterfront NY.

The contract for sale priced the property at $880 million, according to Bloomberg. The buyers plan to renovate the building's interiors and convert 500,000 square feet of storage into leasable space, according to Wall Street Journal.

Industry sources told CoStar News that details of the leaked transaction as reported by Wall Street Journal were accurate, and that the figure reported by Bloomberg was the accurate price.

L&L Holding in October teamed with JP Morgan to invest up to $4 billion on New York City commercial real estate properties.

A sales price of $880 million would make Terminal Stores the second-priciest office trade in Manhattan so far this year, beaten only by Google’s nearly $2.4 billion acquisition of Chelsea Market in March. In that transaction, seller Jamestown made $2,017 per square foot.
See CoStar COMPS #4176110.

Encompassing 1.13 million square feet, the historic Terminal Stores building spans the entire block between 11th and 12th avenues and West 27th and West 29th streets, hugging the boundaries of Chelsea and Hudson Yards neighborhoods. About one-half of its square footage encompasses storage space, according to CoStar research. Uber maintains about 64,000 square feet as an anchor tenant.

GreenOak acquired a 49-percent stake in the property from Waterfront NY Realty in 2014 for $147 million, according to CoStar data. That values the property around $300 million, garnering the sellers a nearly threefold increase.

See CoStar COMPS #3038989.

Waterfront NY has owned the building since 1983, according to public records, but took out a $75 million loan with Morgan Stanley as a mortgage consolidation in 2012.

When the nine-story brick building was completed in 1891, railroad tracks crossed its ground floor from 12th to 11th avenues. That space became a retail arcade called the Tunnel. Bounded by restaurants, showrooms and galleries, the Tunnel was also available to be rented out for special events, Waterfront NY says on its website.

Stephen Roth, chief executive of Vornado Realty Trust, said in its second-quarter earnings on July 31 that the anticipated Terminal Stores deal was evidence of a "red hot Chelsea market."

Diana Bell, New York City Market Reporter  CoStar Group   
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