ESRT Picks Up Williamsburg Retail Buildings for $26M in Rare Brooklyn Purchase
Empire State Realty Trust (ESRT) has acquired a pair of retail properties at North Sixth Street and Wythe Avenue in Williamsburg for $26 million, in what appears to be the company’s first purchase outside of Manhattan or Connecticut in decades.
The pair of buildings at 157-159 and 161 Wythe Avenue rise four and three stories, respectively, and are 100 percent leased, according to a press release from ESRT. The properties have 5,600 square feet of retail leased with an average lease term of seven and a half years, and six market-rate apartments. The seller of both buildings is Eric Mann of The Mann Group, a Greenpoint-based real estate investment firm. The company didn’t immediately return a request for comment.
The real estate investment trust funded the deal using cash from its balance sheet and proceeds from a tax-deferred 1031 exchange, which involved selling several suburban office and retail buildings in Connecticut.
“Consistent with our previously stated plan to add well-located NYC assets and recycle out of select non-core assets through 1031 exchanges, we are excited to add these two properties in a highly desirable section of Brooklyn,” Anthony Malkin, ESRT’s president and CEO, said in a statement. “Williamsburg is now among the most popular retail markets in New York City, and North Sixth Street specifically has seen very significant retail absorption over the last decade.”
JLL‘s Brendan Maddigan, Stephen Palmese, Ethan Stanton, Michael Mazzara and Winfield Clifford represented the seller in the deal.
“The buyer of 157-161 Wythe Avenue is well positioned to capitalize on one of the city’s fastest growing retail markets,” Stanton said in a statement. “Williamsburg and the Greenpoint waterfront will experience an influx of nearly 9,000 luxury residential units over the next five years, and this densification will continue to increase demand from retail tenants seeking to be in one of the most desirable 24/7 live-work-play neighborhoods in New York City.”
Over the course of the pandemic, ESRT has struggled with its stock price and vacancy across its portfolio, because it mostly owns older Manhattan office buildings. It also lost one of its largest office tenants, Signature Bank at 1400 Broadway, but rebounded when Flagstar Bank, which assumed Signature’s assets, took over the lease.
However, a recent analysis from Barclays found that ESRT had the best occupancy improvement of all the office REITs in the second quarter, with a 3 percent jump to 86 percent occupied across all of its buildings.
The REIT has also been pushing away from offices and buying other asset classes, picking up several multifamily buildings last year including 298 Mulberry Street for $115 million in December.
Update: In this story, CO originally wrote that ESRT had lost Signature Bank as a tenant, but didn’t mention that Flagstar had taken over the space.
Rebecca Baird-Remba can be reached at firstname.lastname@example.org.