Petal power pays off as M&M make $10m Flower District sale

Real Estate Weekly, May 19, 2004

Marcus & Millichap Real Estate Investment Brokerage Company recently completed a $10.85 million sale of three loft buildings in the Flower District in Manhattan.

Shlomo Manne and Barry Kimchy, investment associates in the firm's Manhattan office, were the exclusive agents for the transaction.

Kimchy and Manne marketed the properties on a national level and the listing generated interest from around the country. Many of the most logical New York buyers were not willing to pay the price the seller wanted. The successful buyer was a private investor from New Jersey.

The buildings are the most recent sales by Kimchy and Manne in this neighborhood.

The three are federal-style buildings consisting of 3 and 4 stories and were built from 1910 to 1922. Currently they are occupied by flower market merchants. They are located at 805-807 Avenue of the Americas and 106 West 28th Street in the heart of the Flower Market.

The Flower Market occupies a small area in Manhattan from 27th to 29th Streets on Sixth Avenue and along 28th Street between Broadway on the east and Seventh Avenue on the west.

The portfolio was presented as a development project with the opportunity to build residential mixed-use buildings. Popularity and demand for housing in the immediate neighborhood of North Chelsea has resulted in major development of the Flower District.

The light industrial trade of this area is waning in favor of residential development. According to Kimchy, these buildings present an opportunity to develop high-end residential properties.

Zoning changes along Sixth Avenue from M1-6 (light manufacturing) to C6-4x (commercial district outside central business district), enable commercial and residential development.

Manne and Kimchy add that the re-zoning, effective September 1999, was intended to preserve the original character of Chelsea's neighborhood by providing more opportunities for housing development.

The re-zoned area of the Sixth Avenue corridor bound by 14th Street to the south and 31st street to the north, has dramatically changed the skyline of the neighborhood with the addition of new high-rise residential buildings.

Nearly 2000 high-rise rental units have been developed in this area since the zoning changes. Notable projects are The Carolina (430 units), 777 Sixth Avenue (312 Units), The Aston (250 Units), Chelsea Tower (227 Units), The Vanguard (301 Units) and The Capitol (387 units).

Chelsea is among New York City's most diverse and vibrant neighborhoods. Its central location, excellent transportation network and wide range of amenities will ensure its vitality and will continue to attract residential development.

The portfolio also contained another building at 41 West 28th Street which Kimchy and Manne successfully closed in September 2003. The property commanded a sales price of $2.65 million. The buyer was a user from New York City.

Kimchy and Manne are continuing to market the last two properties remaining in the portfolio. The properties are adjoining buildings located on West 28th Street.

The offering has 40 feet of frontage on the north side of the street, creating a value for potential commercial development. The FAR is 10.0, enabling 40,000 buildable square feet.