GLOBAL - ING Clarion Partners has bought the 90,000 square foot 636 Avenue of the Americas in New York City in a deal worth $42.5m (€32m).
The real estate manager is considering the investment a potential value-added one, despite the building being fully leased at time of purchase, and plans to bring in new leaseholders as old contracts expire.
Ed Rotter, managing director at ING Clarion, said: "We are planning on not renewing any leases with the current tenants as they expire. This will be happening with some tenants in the near future."
Rotter said the property was located in a "very strong sub-market" in the city, adding that the region of Chelsea, where the building is located, currently sees on average 7.8% of space stay vacant.
"The expectation is that this could be dropping to less than 3% over the next four years," he said.
Even the retail portion of the property is considered a leasing opportunity, with the 20,000 square foot space currently occupied by sporting goods store Sports Authority. The retailer's lease has a number of years to go at a below-market rate.
Rotter said: "The plan here would be to release the space to Sports Authority at a higher rate or to bring in a new retail tenant."
He said the surrounding area had attracted the attention of a number of large national retailers, including Best Buy, Trader Joe's and Bed Bath and Beyond.
Rotter said half of the building's income came from the retail space, despite it only accounting for a fifth of the building.
"This is an indication as to how high the rental rates are for retail space in this part of the city," he said.
ING Clarion acquired 636 Avenue of the Americas in a joint venture with William Macklowe Company, with ING the main equity investor and WMC acting as operating partner.
The property was purchased on an all-cash basis from APF Properties.
ING Clarion made the investment for a separate account institutional client. The two owners of the property are planning substantial upgrades to the building's interior and common areas, as well as its mechanical systems.