Tankhouse pays $40.6M to Pilot Real Estate Group for mixed-use in Gowanus

Tankhouse through the entity 2201 Union LLC paid $40.6 million to Pilot Real Estate Group through the entity 450 Union LLC for mixed-use building (K1) at 452 Union Street in Gowanus, Brooklyn.
The deal closed on September 14, 2022 and was recorded on September 21, 2022.

The seller bought the property on September 9, 2014, for $12.3 million. The signatory for Pilot Real Estate Group was Eric Schwartz. The signatory for Tankhouse was Sam Alison-Mayne.

Tankhouse through the entity 2201 Union LLC as borrower signed an acquisition loan with lender Israel Discount Bank valued at $20 million for the parcel.

Because of the Gowanus rezoning, the site has development rights for 142,500 buildable, yielding a price per foot of $285 per foot buildable. Sean Kelly and Steven Stephen Vorvolakos of Ariel Property Advisors brokered the sale on behalf of the sellers.

PincusCo first reported the property was in contract in July.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer Tankhouse purchased four properties in four transactions for a total of $30.6 million and has no record it sold any properties over the past 24 months.
The seller Pilot Real Estate Group had not purchased any other properties. The 9,880-square-foot property generated revenue of $772,393 or $78 per square foot, according to the most recent income and expense figures.

The property

The 452 Union Street parcel has frontage of 80 feet and is 300 feet deep with a total lot size of 28,500 square feet. The lot is irregular. The zoning is M2-1 which allows for up to 2 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $3 million.The most recent loan totaled $9 million and was provided by M&T Bank on December 5, 2019.

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 not received any significant violations in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on March 3, 2017. On these lots, there is one active new building construction project for a 24-unit, 68,999-square-foot R-2 building. The project was developed by Rob Rieger with plans filed September 24, 2021 and it has not been permitted yet.

The neighborhood

In Gowanus, the bulk, or 47 percent of the 9.3 million square feet of commercial built space are industrial buildings, with elevator buildings next occupying 19 percent of the space. In sales, Gowanus has 1.3 times the average sales volume among other neighborhoods with $431.7 million in sales volume in the last two years and is the 15th highest in Brooklyn. For development, Gowanus is the 7th most active neighborhood among other neighborhoods. It had 4.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 51 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the four commercial properties representing 10,600 square feet of the 10,600 square feet. The two identified owners are Robert Rieger and Rabsky Group.
There are three active new building construction projects totaling 302,401 square feet. The largest is a 164-unit, 153,506-square-foot R-2 building developed by Rafael Rabinowitz with plans filed January 3, 2022 and it has not been permitted yet.The second largest is a 93-unit, 79,896-square-foot R-2 building developed by Rafael Rabinowitz with plans filed February 10, 2022 and it has not been permitted yet.

The majority, or 93 percent of the 10,600 square feet of built space are mixed-use buildings, with industrial buildings next occupying 7 percent of the space.

The buyer

The PincusCo database currently indicates that Tankhouse owned at least five commercial properties in New York City with 71,937 square feet and a city-determined market value of $13.9 million. (Market value is typically about 50% of actual value.) The portfolio has $44.6 million in debt, borrowed from Bank Hapoalim. Within the portfolio, the bulk, or 71 percent of the 71,937 square feet of built space are elevator properties, with mixed-use properties next occupying 14 percent of the space. They are all located in Brooklyn.

Correction: The total amount of air rights is greater than the figure previously reported, which was based on the buildable before the Gowanus rezoning. Because of the rezoning, the site has rights for 142,500 buildable, yielding a price per foot of $285 per buildable. Sean Kelly and Steven Stephen Vorvolakos of Ariel Property Advisors brokered the sale on behalf of the sellers.

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