On August 27, 2008, an affiliate of Meritage in joint venture with Avenue Capital and Hidrock Realty acquired 240 West 35th Street, a 162,000 SF, 18-story, office building located in the Penn Plaza submarket of Manhattan, New York. Built in 1924, the building has a concrete foundation with a beige brick and stone façade, typical for its location and age. Upon purchase, the property was 100% leased to approximately 40 different tenants, with an average tenant size of about 4,000 square feet. 240 West 35th Street is ideally located in the “Transit Triangle” within a short walk of fourteen subway lines, the PATH station, Penn Station, and the Port Authority. The Penn Plaza submarket has traditionally catered to apparel and textile firms, although a marked transformation has begun as market pressures from surrounding submarkets have driven the more traditional office tenants to this area.
Meritage acquired 240 West 35th Street with a strategy of repositioning the Property through extensive capital improvements and a successful leasing campaign, as nearly 85% of the building’s below market leases “roll” over the first 4 years. After extensive renovations, Meritage delivered a completely new lobby and reception area, as well as upgraded common corridors and bathrooms on all multi-tenant floors throughout the building. This is Meritage’s first venture with Hidrock Realty, an established, first class local partner whose operating philosophies mirror those of our firm. The strategically strong location of this asset, coupled with the capital and operating improvements completed at the property, should allow for significant revenue growth over the next three to five years.