New School buys previously leased Gramercy dorm for $124.5M from Bhatia, Sherwood

The New School, which previously leased the 318 East 15th Street dormitory now owns the midblock 140-unit property, after paying $124.5 million to Bhatia Development and joint venture partner Sherwood Equities for the Gramercy building.

The deal closed on March 31, 2022 and was recorded on April 5, 2022. Arun Bhatia was the signatory for Bhatia Development and Sherwood. Tokumbo Shobowale signed for The New School.

The New School began leasing the midblock 140-unit property in 2008 when it signed a lease set to expire in 2024. The lease was valued at $38.8 million.

“The timing was right for The New School to purchase and renovate the university’s residence hall located at 318 East 15th Street,” Amy Malsin, Assistant Vice President of Communications and Public Affairs told PincusCo in a statement. “The acquisition will result in a meaningful reduction in annual costs and is consistent with our strategic plans to focus resources on our educational mission and best serving our students.”

Bhatia Development did not immediately respond to a PincusCo request for comment.

The property has 112,898 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $1,102 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.)

Bhatia Development originally bought the property on January 31, 2008, for $56 million.

Prior sales and revenue

The former owners according to the Department of Housing Preservation and Development includes Arun Bhatia, head officer and Jeffrey Katz, officer. The business entity is Booth 15 Property Llc.

The property

The 318 East 15th Street parcel has frontage of 156 feet and is 103 feet deep with a total lot size of 16,176 square feet. The zoning is R8A which allows for up to 6.02 times floor area ratio (FAR) for residential with inclusionary housing. The city-designated market value for the property in 2022 is $34.6 million.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has received seven DOB violations, $2,500 in ECB penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The neighborhood

In Gramercy, the bulk, or 46 percent of the 16.4 million square feet of commercial built space are residential elevator buildings, with specialty buildings next occupying 19 percent of the space. In sales, Gramercy has had very little sales volume relative to other neighborhoods with $125.7 million in sales volume in the last two years. For development, Gramercy has 1.4 times the average amount of major developments relative to other neighborhoods and is the 17th highest in Manhattan. It had 1.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 8 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the 33 commercial properties representing 58,543 square feet of the 430,944 square feet. The largest owner is City of New York, followed by Richard Podpirka and then Dora Shore. There are no active new building construction projects on this tax block.

The majority, or 37 percent of the 623,750 square feet of built space are residential elevator buildings, with residential walkup buildings next occupying 25 percent of the space.

Surrounding

Within a 400-foot radius of 318 East 15th Street, PincusCo identified two commercial real estate items of interests occurred over the past 24 months.
Of those two items, two were loans above $5 million totaling $32 million. The most recent of the two was Yusuf Bildirici which borrowed $20.5 million from Cantor Commercial Real Estate Lending secured by the 17,794-square-foot, 21-unit rental (D7) on 231 2nd Avenue and one other property on March 11, 2020.

Direct link to Acris document. link