Financing comes together for the office building planned for the gateway of the East Village
All has been quiet on the northeast corner of Third Avenue and St. Mark’s Place since workers cleared the lot in late summer of the assemblage of buildings that housed Korilla BBQ, the Continental and McDonald’s, among other businesses.
For the foreseeable future, the RIP ST. MARKS message, which arrived over the summer on the west-facing wall of 5 St. Mark’s Place, will continue to greet passersby.
As you likely know, a 10-floor office building with ground-floor retail is in the works here. The total size of this new building has yet to be officially determined. Real Estate Equities Corporation (REEC) wants to transfer the air rights from the landmarked Hamilton-Holly House at 4 St. Mark’s Place to add more square footage, a move that has plenty of critics.
The City Planning Commission will likely sign off on the project next as part of the city’s Uniform Land Use Review Procedure. City Council will have the final say on the Morris Adjimi-designed building. Those meeting dates have not yet been made public. (This Zoning Application Portal provides a project status. The most recent activity by the developer: filing the Land Use application on Oct. 3.)
Meanwhile, the financial elements are coming together for the project.
This press release — citing square footage even though it hasn’t been determined — landed in our inbox last Friday:
Madison Realty Capital (MRC) has provided a $48 million senior loan for the funding of a $79.1 million financing package for the development of a mixed-use office project at 3 St. Mark’s Place …
Hana Financial Group, a leading South Korean financial services company, provided Real Estate Equities Corporation (REEC), an experienced local developer with an additional $31.1 million of mezzanine financing to fully capitalize the project.
REEC’s development plans call for a 10-story, 68,224-square-foot modern boutique office building with eight floors of office space, a fitness center, roof deck, and 7,886 square feet of retail.
The property is well-located at the corner of St. Mark’s Place and 3rd Avenue in a section of Manhattan’s East Village that has seen significant growth in demand for quality office space from a mix of tech, finance, law, and family office tenants in recent years.
The site is adjacent to 51 Astor Place, a 400,000-square-foot office and retail asset developed by Minskoff Equities that is home to anchor tenants IBM Watson and St. John’s University, in addition to a strong retail roster that includes Shake Shack, Flywheel, Bluestone Lane and Orange Theory.
In reporting on this financing, The Real Deal noted:
The developers will be eyeing rents in the area of $150 per square foot. Such figures were once only seen in the most expensive locations in Midtown but now are commonplace for newly constructed office buildings in areas like the Meatpacking District, Soho and Greenwich Village.
Madison Realty Capital, who provided the senior loan, is a familiar name for some EV residents. In the fall of 2015, they loaned $124 million to Rafael Toledano, a then 25 year old with no track record as a landlord so that he could buy a portfolio of 15 buildings, mostly in the East Village. He eventually defaulted on Madison’s loan.
REEC picked up the 99-year leasehold for the properties here for nearly $150 million in November 2017. The corner assemblage is owned by the Gabay family.
Previously on EV Grieve:
Demolition permits filed for northeast corner of 3rd Avenue and St. Mark’s Place