A partnership between San Francisco-based DivcoWest and Brickman Associates has purchased a group of office buildings in Midtown South at 24-28 West 25th Street and 40 West 25th Street, it was announced today. The closing price on the portfolio was approximately $115 million.
DivcoWest is entering the New York market for the first time, James Murphy, executive managing director at Colliers, who represented the seller, Yeshiva University, told The Commercial Observer. The firm focuses on assets and markets with a high concentration of technology tenants.
“With the growth of the tech industry, it is the right time to enter the market,” Mr. Murphy said.
Both buildings total approximately 250,000 square feet and will undergo capital improvements including in the lobbies and elevators, according to Mr. Murphy. “Both of the buildings have significant lease rollover, there is going to be an opportunity to reposition and create value,” he said.
The Midtown South area is poised for more growth, with the technology sector having been an anchor for the neighborhood for over 15 years, Mr. Murphy added. The trend of private equity groups and institutional investors, such as Brickman, buying in the market will continue, he noted.
“The vacancy rate is very low, there is little construction and more tenants want to be in that area,” Mr. Murphy said. “Buildings like these are being renovated to continue to push rents.”
As reported earlier by The Commercial Observer, Massey Knakal represented Yeshiva University in the sale of another portfolio of buildings for $87.5 million.
Mr. Murphy, Michael Cohen, Louis Prisco and Margaret O’Keeffe of Colliers represented the seller on the transaction. The buyers were represented in-house.