Developer SoBro — and Its Art Storage Company Tenant — Renew 137K SF in the Bronx
Transcon, an art storage company, tried to purchase the building from the city in 2016, but the city canceled the sale. Now it's taking over the long-term lease for the property.
By Rebecca Baird-Remba November 9, 2023 5:30 pm
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Longtime nonprofit developer South Bronx Overall Economic Development Corporation (SoBro) renewed its lease for a Port Morris warehouse at 131 Walnut Avenue that it sublets to a fine-art storage company, Transcon International.
SoBro, which was founded 50 years ago with the aim of revitalizing the South Bronx, will keep its 137,605 square feet in the six-story industrial building, according to The City Record and the Department of Citywide Administrative Services (DCAS). The group has rented the entirety of the city-owned property at the corner of East 134th Street since 1982, per a DCAS spokesperson.
SoBro signed a 20-year lease with the option for an additional 10-year extension, according to The City Record. It must pay $1.25 million in back rent at lease signing, cover the cost of the building’s real estate taxes as additional rent, and pay a base rent of $714,193 annually, with 3.5 percent escalations every two years.
The nonprofit has developed, owned and managed more than 1,500 units of affordable housing in the area and hundreds of thousands of square feet of industrial and commercial space.
However, SoBro doesn’t actually occupy this building. It plans to assign the lease to its long-term subtenant Transcon International, aka Port Morris Realty, which has been in the property for nearly two decades, according to the public notice and Transcon. Sources familiar with the deal said that SoBro could no longer afford to manage the property and had been struggling to pay for repairs and property taxes, which is why Transcon was taking over the lease.
Transcon, which specializes in storing and shipping artwork for private collectors, galleries and museums, attempted to buy the property from the city in 2016. The company bid $11 million for the building, but the city canceled the sale over an additional $500,000 in unpaid late fees, Politico New York reported at the time.
SoBro was opposed to the sale because it relies on the proceeds from the lease to fund its community programs, which include youth education, adult career development, and help with real estate and financial planning for small businesses.
“The transaction that was being proposed made no sense whatsoever, unless we were evicted from our lease,” Phillip Morrow, then-president of SoBro, told Politico at the time. “So all we could think of was that the whole plan was to throw us out, figure out a way to break the lease that we had on the property. And obviously we did not want to be evicted. It was a major source of revenue for our organization.”
John Mullane, the chairman of Transcon, declined to comment on the lease. He did say, however, that he would still be open to buying the building if the city was willing to sell it.
Spokespeople for SoBro didn’t immediately return a request for comment.
Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com.
