CBRE fund pays $332M to DH Property, Goldman Sachs for Amazon-leased distribution center in Red Hook

CBRE Investment Management through the entity 640 Columbia Venture, LLC acquired an interest from developer DH Property Holdings and Goldman Sachs Asset Management through the entity 640 Columbia Street Jv LLC valued at $332 million for the multi-story distribution center (E1) at 640 Columbia Street in Red Hook, Brooklyn.
The deal closed on June 28, 2022 and was recorded on July 14, 2022. The property has 478,268 gross square feet of built space according to PincusCo analysis of city data. The sale price per gross square foot is $694 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.) The reported square feet was approximately 400,000 square feet, yielding a price per foot of $830 per foot.
The seller bought the property on February 14, 2018, for $47.5 million, and then constructed the three-story distribution center using a construction loan from Square Mile Capital.

The signatory for DH Property Holdings was Dov Hertz, and for CBRE was Mary Lang.

DH Property sold a building to Brookfield Asset Management for $45 million last year and sold a Sunset Park property to Prologis for $60 million in 2020.

Prior sales and revenue

The 478,268-square-foot property generated revenue of $13 million or $27 per square foot, according to the most recent income and expense figures.

The property

The 640 Columbia Street parcel has frontage of 660 feet and is 300 feet deep with a total lot size of 176,041 square feet. The lot is irregular. The zoning is M3-1 which allows for up to 2 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $23.8 million.The most recent loan totaled $131 million and was provided by Square Mile Capital Management on July 20, 2020.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received one DOB violation, $3,750 in ECB penalties, and $3,750 in OATH penalties in the last year.

Development

On these lots, there is one active new building construction project for a warehouse (S-1) building with 478,268 gross square feet of space and 335,813 zoning square feet of space. The project was developed by Dov Hertz with plans filed June 8, 2018 and permitted August 31, 2020.

The neighborhood

In Red Hook, the bulk, or 47 percent of the 9.2 million square feet of commercial built space are industrial buildings, with residential elevator buildings next occupying 27 percent of the space. In sales, Red Hook has 1.3 times the average sales volume among other neighborhoods with $418.6 million in sales volume in the last two years and is the 11th highest in Brooklyn. For development, Red Hook has 1.3 times the average amount of major developments relative to other neighborhoods and is the 16th highest in Brooklyn. It had 1.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 15 percent of the neighborhood’s built space. There were two pre-foreclosure suit filed among other industrial buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of two of the seven commercial properties representing 478,268 square feet of the 1,413,700 square feet. The two identified owners are Goldman Sachs Asset Management and Thor Equities.
There are four active new building construction projects totaling 1,310,016 square feet. One is a 24,688-square-foot F-1 building developed by Robert Hughes with plans filed June 2, 2015 and permitted March 1, 2018. The largest is a 638,548-square-foot B building developed by Thor Equities with plans filed June 2, 2016 and it has not been permitted yet.

The majority, or 50 percent of the 1.4 million square feet of built space are industrial buildings, with specialty buildings next occupying 26 percent of the space.

Surrounding

PincusCo has not identified any commercial real estate items of interest within a 400-foot radius of 640 Columbia Street that occurred over the past 24 months.

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