November 30, 2010

Former Saks site in Garden City sells for $62M

News Day

Originally published: November 30, 2010 8:21 PM

A national real estate investment trust wants to own more Long Island commercial property after its first deal in Garden City broke a square-foot price record.
After five years of trying to buy in the Long Island-New York City market, the Massachusetts-based Intercontinental Real Estate Corp. got the former Saks Fifth Avenue store in a $62.6-million deal in October with Westchester developer Alfred Weissman, who had bought the space in 2006.
The $498.63 per-square-foot price is a Long Island record for mixed-use spaces, said Brian Lee, a principal at commercial brokerage Newmark Knight Frank in Melville.
Paul Nasser, Intercontinental's chief financial officer, said the Garden City property is a "core asset" worth the price, because it's fully rented, with tenant leases of up to 25 years.
The firm has no plans to change the setup with tenants Winthrop-University Hospital, Morgan Stanley, a restaurant and Walgreens drugstore, all drawn there by Weissman after Saks closed.
"Given the quality of the tenants and the long-term nature of the leases, we feel we got a pretty good price there," Nasser said.
"We're always looking all over the place, but New York and Long Island have been two markets that we've been looking to break into for some time, and it's been difficult. In Manhattan for example, deals are very large. We don't typically buy $200-million-plus properties."
Long Island's commercial real estate market has been on the wane with rising vacancy rates and owners failing to repay maturing loans.
To Lee, the deal proves one thing: "This is evidence that in spite of the terrible market and devaluation of real estate, Long Island is a place that has valuable real estate that people are willing to pay for."
Weissman did not return calls, but Lee said the developer maximized the value of his asset by selling now.
"You want to sell a property that's fully leased, at the beginning of the leases, because that's when you can get the most money for that," he said. "Someone's willing to pay a lot of money because they can finance the building at low interest rates."