CPEX Real Estate’s Brooklyn Development & Conversion Team has arranged the ground lease of an 88,000- square-foot industrial site in Red Hook, Brooklyn. The site, located at 537-555 Columbia Street, consisting of land and multiple industrial buildings that have been vacated to allow redevelopment. Zoned M1-1, it offers 88,000 buildable square feet for commercial or manufacturing use or 211,000 buildable square feet for a community facility, as-of-right.
“DHPH intends on delivering the first Class A industrial development to Brooklyn,” said Dov Hertz, principal at DH Property Holdings. “With 36-foot clear ceiling heights, 54’ x 54’ foot column spacing, one loading dock for every 3,500 square feet and floor loads in excess of 700 pounds per square foot, 537 Columbia will be the premier asset for any user looking to be within a one-hour drive of 13 million people.”
CPEX Managing Partner Brian T. Leary and Associate Director Jidan Kim, along with Associate Director Sean Sears, represented the long-term ownership and procured a 99-year ground lease with Dov Hertz of DH Property Holdings.
The CPEX Development & Conversion Team has completed nine ground leases over the past five years across multiple markets and asset classes in Brooklyn and Queens, including market-rate residential, affordable housing, hotel, retail and academic space.
“This is a unique transaction structure and something we are well-versed in,” said Leary. “It is tax efficient and given that current capitalization rates are at all-time lows, it has become difficult to find replacement properties with value, often driving sellers to seek opportunities outside New York City to obtain higher returns. This type of structure significantly improves property values for ownership based on the long-term stable cash flow and allows for continued ownership of an improved and highly financeable asset in New York City.”
Based on a CPEX market study with data sourced from New York City public records, the price per square foot of industrial property sales in New York City has increased 176% in the six-year period from 2011 to 2017. In Brooklyn alone, the price per square foot has increased 373% over the same period.
“We are seeing strong demand for industrial properties city-wide. It’s a function of the booming e-commerce market and the demand for warehouse and logistics space to meet this phenomenon, as well as the lack of inventory for quality industrial buildings and industrial-zoned sites,” said Kim.
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