A Garment District apparel company has zigged where others have zagged.
As buyers and sellers of commercial real estate take a breather, Studio Nazar, which specializes in midmarket women’s clothing, has snapped up the 7-story office building at 124 W. 36th St. as an investment property. It’s a bet that interest rates will soon come down and office rents will rise, to revitalizing effect.
“I believe the market will come back at some point,” Joseph Nazar, the company’s founder, told Crain’s. “At least that’s my hope.”
Nazar added that the midblock site, near Seventh Avenue, will become the new location of Studio Nazar’s offices, which are currently at nearby 499 Seventh. But Nazar added that his 30-year-old company will not undertake any manufacturing at the 28,000-square-foot building and will likely lease out empty floors to different kinds of tenants.
No. 124 is more than 30% vacant, according to CoStar, while rents in the building average $28 per square foot a year. The deal went into contract Jan. 10 and closed May 3. Bank of America provided $5 million in acquisition financing, according to the city register.
The seller of the 1922 structure, which also contains retail space, was Dosol Corp., a real estate entity based on West 37th Street. Alan Mandelbaum, who signed the deed on Dosol’s behalf, could not be reached for comment.
Fashion companies have shown an interest in sewing up deals in the past few months. Prada spent a whopping $822 million at the end of 2023 on a pair of Fifth Avenue buildings in the Plaza District, at Nos. 720 and 724, before tacking on a third commercial space on West 56th Street in April for $13 million.
And a few weeks later, Gucci parent Kering plunked down $963 million for 715-717 Fifth Ave., a property right across the street with multiple levels of retail space.
The moves were seen as an attempt to lock in real estate costs at a time of unpredictability and fluctuation, though the companies were reportedly hunting around for years.
Studio Nazar’s acquisition is hardly in the same ballpark. But it’s not the first Garment District clothing company to avail itself of depressed values in its neighborhood.
In March Walter & Samuels unloaded 225 W. 39th St., a similarly aged midblock property and one stung by the departure of coworking provider WeWork, for about $22 million to executives at IHL Group, a manufacturer of casual clothing for TJ Maxx and other stores.
Older office buildings lacking amenities and located in untrendy neighborhoods, a description that could apply to much of the Garment District, have been particularly vulnerable in the current office-market slump. Their small-scale tenants are often deciding not to renew their leases at the Class B and Class C buildings because many of their employees now regularly work from home, brokers and landlords say.
But Mayor Eric Adams has proposed rezoning the Garment District and other Manhattan enclaves to create as much as 4,000 units of housing, a change that could boost sagging property values. No. 124 sits in an area the mayor has pledged to rezone.
C. J. Hughes , 2024-05-07 18:07:10
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