Savanna Pays $75.8M for Adjacent Chelsea Loft Buildings


New York-based real estate private equity and asset management firm Savanna has closed on its acquisition of two adjacent loft-style office buildings at 245 West 17th Street and 249 West 17th Street in Chelsea for $75.8 million, city records show.

Originally a dry goods warehouse and wagon house for the Siegel-Cooper Company department store, the property at 249 West 17th Street is a 145,000-square-foot, six-story building.  The other property, equal in square footage, is 12 stories high.

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The two properties have a combined 40,000 square feet of office space and are located within a couple blocks of Chelsea Market, the Meatpacking District and Google (GOOGL)’s 111 Eighth Avenue.

249 West 17th Street -- the former Siegel-Cooper warehouse
249 West 17th Street — a former Siegel-Cooper warehouse

“We view 245 and 249 West 17th Street as very timely and unique opportunities for the types of tenants who identify with the benefits, both tangible and intangible, of being a part of this Chelsea/Meatpacking community,” said Kevin Hoo, a vice president at Savanna, in a prepared statement.

Savanna announced that it will undertake a $21 million capital improvement program at the properties, including mechanical upgrades, new elevators and lobbies, and a renovated façade and roof, with the potential for a tenant rooftop amenity at 249 West 17th Street.

“We will implement a plan to install brand new systems, while preserving and enhancing the loft-style aesthetic, including original hardwood floors, exposed ceilings and the open-architecture collaborative workspace,” Mr. Hoo said.

Brian Ezratty of Eastern Consolidated was the sole broker in the transaction.

“This was not something that was offered out to market — it was a very quiet, confidential situation and I was only really authorized to go out to one group,” Mr. Ezratty told The Commercial Observer, calling Savanna a “solid and aggressive buyer” for this type of product.

“Originally we thought the seller was planning on doing a residential development, but in the end it made more sense for the office market because it became so hot,” he added.

The buyers were represented by the law firm of Cole, Schotz, Meisel, Forman & Leonard, P.A., as well as Ackman-Ziff on debt capital sourcing.

Newmark (NMRK) Grubb Knight Frank has been appointed as exclusive agents for the properties.  David Falk, Peter Shimkin, Danny Levine and Nick Berger will oversee office leasing, while Jeff Roseman and Amy Zhen will handle the retail space.

“These buildings will provide exactly the kind of space today’s exciting, growing companies are looking for,” said Mr. Falk, a principal and president of New York Tri-State Region at NGKF, in a prepared statement, adding that the properties lie in “the heart of the sweet spot in the Midtown South leasing market.”

The purchase brings Savanna’s Manhattan office portfolio to more than four million square feet.  So far this year the firm acquired 2 Rector Street, 576 Fifth Avenue, 15 East 26th Street and the retail condominium at 465 Broadway.

The Chelsea transaction was reportedly part of a structured deal with Atlas Capital Group, who had originally executed an agreement in November 2010 to purchase the fee simple interest in both properties.

Neither firm returned calls seeking comment.