It won’t change the entire commercial real estate landscape, but the $97.8 million, or $743 per-square-foot, sale late last month of a trophy Class A property in Greenwich might change the way property owners look at pricing, according to the broker who represented the building’s seller and procured the buyer. The building might have commanded the highest price of any office building in Greenwich.
“For any property owner [especially those in Greenwich], they will take notice of this sale,” said Jeffrey R. Dunne of CB Richard Ellis’ Tri-State Investment Team.
The sale could have a big effect on pricing in Greenwich’s office market, according to Dunne.
“It just changes people’s thinking of what things are worth,” he said.
Willrich Holdings, a partnership of the Willett Cos. in Rye, N.Y., and Warren & Partners in Dublin, Ireland, bought the 131,630-square-foot building at 55 Railroad Ave.
“[The building] provided an opportunity for our investors/partners to acquire a 100 percent leased, first-class office building in a superb location in one of the most affluent communities in the [United States],” said Frank Kenny of the Willett Cos., in a prepared statement. “We are very pleased with the acquisition.”
The high price – the closest Dunne has seen was $483 per square foot, as opposed to this sale’s $743 per square foot – was paid because of the property’s quality and location, according to CB Richard Ellis. Buildings that trade at such a high price are usually found only in New York City, Dunne said. But the Greenwich property is a “dream come true” for the owner, he said.
“It’s a great, great piece of real estate,” Dunne said.
‘Intense’ Competition
The Railroad Avenue building is located in Greenwich’s central business district across the street from the main Greenwich Metro-North train station and a quarter of a mile from Interstate 95, according to CB Richard Ellis. The building’s former owners recently completed a $7.2 million renovation, which enhanced the lobby, common areas, facade and other building systems to what CB Richard Ellis described as “a level found primarily in the world’s primary business centers like Manhattan.”
The building has solid, long-term leases, according to Dunne. It houses hedge funds and one of Bank of America’s private banks. The building is fully leased, according to a CB Richard Ellis press release. Companies there have long-term commitments, according to the release.
Greenwich’s office market – thanks, in large part, to the stable hedge funds that call it home – has remained strong over the past several years as other Fairfield County cities and towns have struggled. Stamford, for example, is just now pulling out of a slump that left vacancy rates relatively high.
“Hedge funds and other specialty financial service firms, in particular, have focused on Greenwich as a must-have location, both for its proximity to desirable residential locations, access to an unusually educated labor pool, transportation options and influential business community,” said Tommy Craig, senior vice president of Hines, the Texas-based investment company that, along with its partner, CalPERS, sold the building, in a prepared statement. “Competition between these firms has driven available supply in Greenwich down, especially in the [central business district], and pushed up rents.”
Competition among investment firms was fierce when 55 Railroad Ave. went on the market, according to Dunne.
“The availability of a property like 55 Railroad is highly unusual, and dozens of bidders recognized the long-term upside offered by its ‘main and main’ location, incredibly strong rent roll on long term leases and location in a site-constrained market as exists in the New York metro area,” Dunne said in a prepared statement. “The competition was quite intense from investors, particularly those with offshore capital – as evidenced by the record price paid. Willrich Holdings should experience good long-term appreciation with this asset.”
The new owners plan to retain the building as a long-term investment, according to Bruce Beswich, the chief financial officer of the Willett Cos.
