Tribeca Investment Group, PGIM Real Estate and Meadow Partners have acquired Manhattan’s 700,000sqft Textile Building and plan to overhaul the 98-year-old property to attract tenants from the local burgeoning technology sector.

It is the first time that the family-owned building at 295 Fifth Avenue has traded since it was built in 1921. The joint-venture partners have created a 99-year ground lease with the owner to gain access to an asset that would not otherwise have become available.

The transaction will enable them to carry out a value-add strategy, investing up to $300m (€266m) to transform what has been the historic home of the New York textiles industry to a modern office for tech companies.

“In creating ground leases, what we find is that we are able to take buildings that are not on the market and potentially create a market opportunity,” said Elliott Ingerman, co-founder of Tribeca.

PGIM Real Estate is providing the majority of the capital for transaction through its US value-add strategy run for third-party investors.

“The bulk of the market is looking for value-add,” said Todd Goldberg, managing director and head of US transactions at PGIM Real Estate. “It’s hard to find and that’s why we really love this transaction.”

Tribeca, which specialises exclusively on the Manhattan market, approached the family owners about “transitioning” the property in what is arguably the hottest leasing market in Manhattan today.

“As markets have shifted, as areas have become more attractive to office tenants with higher profit margins, some of these industry buildings have moved out of the city and transitioned,” Ingerman said. “So we went to the family and expressed to them that there was probably a shift taking place.”

The plan is to spend between $200m and $300m to upgrade the building, including the construction of a new lobby, retail store fronts, mechanical upgrades and a large glass addition on the rooftop.

“Typically, families that have owned buildings for 100 years are not willing to take on that type of risk,” Ingerman said.

The sub-market around Midtown South is experiencing strong demand for office space – especially for larger floor plates, which are scarce.

The Textile Building, which occupies a full block along Fifth Avenue – situated between Hudson Yards and Pennsylvania Station – has 700,000sqft of space across 17 floors, with individual floor plates in excess of 40,00sqft.

“Finding assets that qualify for those types of requirements in this Midtown South region of the market, which is the area that most people are focused on, is pretty rare,” said Ingerman.

Goldberg said the area was “one of the best, if not the best, sub-market in the city that really attracts a number of tenants for a number of reasons, including transportation access, access to restaurants and entertainment”.

Technology and finance companies are “looking for repositioned, renovated buildings that have the qualities they are looking for,” he said. “This has floor plates that are large and can accommodate those.”

Tribeca and Meadow Partners, which manages private real estate funds, are providing capital for the transaction alongside PGIM.

Goldberg said the large size of the transaction (the price was not disclosed) meant PGIM was “comfortable” co-investing alongside “another institutional manager”.

Tribeca, founded by Ingerman and Bill Brodsky in 2000, is seeking to capitalise on growing demand from international investors for exposure to the Manhattan market.

The company has traditionally been a deal-by-deal investor, developer and operator, but is seeking to move more into an investment-manager role, targeting separate accounts.