Discover the successful sale of a 10-story commercial loft building at 10 East 34th Street in Midtown East. Explore the strategic approach behind this prime real estate transaction in one of New York City's most desirable neighborhoods.
Property Highlights: Mixed-Use Office Building Cost and Details for 10 East 34th Street, Manhattan
Bob Knakal and his team helped the owners of 10 East 34th Street successfully navigated the challenge of valuing and marketing the building’s vacant retail space by leveraging detailed market research and an innovative strategy, ultimately securing a $51.7M sale. The team's efforts led to a competitive bidding process, resulting in a satisfied client and a premium sale price.
- Property Location: 10 East 34th Street in Midtown East, between Fifth Avenue and Madison Avenue, this property is just steps from the Empire State Building and 3 blocks away from Grand Central Terminal.
- Property Description: Approximately 53 feet of frontage on a prime Manhattan corridor, this 10-story commercial loft building includes a ground-floor retail unit and nine full-floor office units.
- Building Sale Price: The property sold for $51.7M at $941 per rentable square foot, securing 54 tours, 26 offers, and closing a $6M non-refundable deposit contract within three months.
- Strategic Dilemma: The owners of 10 East 34th Street faced the challenge of selling the building with 60% vacancy or leasing the space, particularly the tricky-to-value ground floor retail area.
- Retail Value Challenge: Valuing the ground floor and basement space was complicated by its location across from the B. Altman & Company building, limiting pedestrian traffic.
- Market Research: The team consulted retail leasing agents, identifying additional value in duplexing the basement with the ground floor, leading to a more informed sales strategy.
About the 10 East 34th Street Location
10 East 34th Street in New York City is located in the Midtown East neighborhood of Manhattan, just steps away from major landmarks. It's within walking distance of the Empire State Building, Macy's Herald Square, Penn Station, Bryant Park, and the New York Public Library. The building is also near Madison Square Garden and the bustling shopping corridor of Fifth Avenue.
10-Story Commercial Loft at 10 East 34th Street Full Story by Bob Knakal
Uncovering Overlooked Retail Value
In debating their options to sell the building at 10 East 34th Street in 2015, the owners, a long-term partnership of Walter & Samuels, Brause Realty Inc., and the Cohen family, were faced with a decision to sell the building with 60% vacancy come January 2016 in hopes of finding a buyer who would pay a user-premium or spend capital on the building and then lease the units, including the valuable ground floor retail space, so a buyer would have in place cash flow.
Of the 10 stories, the five vacant upper/office floors were relatively comparable to other Class B office space on the market, therefore, easy to determine value. However, the challenge was valuing the vacant ground floor and basement space due to its unique location mid-block on 34th Street.
While 34th Street is one of Manhattan’s most active retail corridors much further west, this specific block created a challenge as the iconic B. Altman & Company building is situated directly across the street and occupying the entire block from Madison to Fifth Avenues (without any retail space on the ground floor), significantly hindering pedestrian foot traffic traveling along the northside of 34th Street.
This challenge could negatively impact retail values across the street. Understanding the space’s potential value would affect the potential sales price and thus influence ownership’s decision about whether to sell now or lease the vacant space and then look to sell.
Prior to the presentation to ownership, we consulted with several retail space leasing agents about the specifics of this potentially duplexed space. As a result, we had a firm understanding of the retail leasing market in the area and concluded that there was additional value with the basement space being incorporated into the ground-floor retail unit.
Due to the strength of the market, the team advised ownership to market the building with the vacant office units, and the retail space vacant with the goal of finding a user willing to pay a premium to occupy some, or all, of the vacant space.
Other brokerage firms that pitched the business overlooked this approach to the property, and we earned the assignment. We implemented our comprehensive marketing strategy, including the distribution of the asset’s marketing flyer to their proprietary lists of investors, brokers, users and territory contacts. We also put together a thorough analysis noting all retail comps in the immediate area, all current and pending development projects in the neighborhood, showcasing the types of tenants drawn to this retail corridor, and details on pricing for the area.
Through a comprehensive retail component valuation and the implementation of a proven marketing strategy, we successfully sold the property to a local property owner who would move one of his businesses into the basement and ground floor – a user – the perfect buyer!
The property sold for $51,700,000, equating to $941 per rentable square foot and an approximate 2.5% capitalization rate.
During the process, the team:
- Secured tours with 54 different, qualified groups.
- Received 26 offers.
- Identified several top bidders, of which three were issued contracts simultaneously. (2 were users).
- Executed a hard contract within three months of going to market, signed at $51,700,000 with a $6,000,000 non-refundable deposit and a 90-day closing period.
Seller's Praise: Bob's Skillful Leadership Delivers Exceptional Outcome
Here's what the seller had to say:
“Our relationship with Bob goes back prior to the inception of Massey Knakal. The years have gone by and the degree of sophistication and excellence Bob and his team have demonstrated gives them an extensive global platform. Bob has demonstrated the ability not only to access buyers in the local market but also to access buyers from around the world. He is a wonderful psychiatrist and chess player as he encourages the parties to come to agreement, regardless of the hurdles every deal faces. When it came time to sell, our partnership chose Bob for those obvious reasons. During the marketing process, as expected, we received offers from a wide array of potential buyers. Ultimately, the activity that Bob and his team generated created a bidding war and, ultimately, an outstanding price for us. It was a job extremely well done!” - David Brause, Brause Realty Inc.
Learn More
Discover the stories behind our most remarkable deals. Dive into our exclusive online magazine to explore these success stories and see how we maximize value and the sale price for our clients. You can also read about the testimonial of the Gray Block Portfolio a Five Class B Office Buildings in Flatiron
