Could this be the final curtain for the showrooms at Midtown South’s famed Textile Building?
The company that’s owned 295 Fifth Avenue in one form or another for nearly 100 years is in contract to sell the ground lease on the historic building that’s home to more than 150 textile showrooms, sources told The Real Deal.
Manhattan Properties Company is selling the leasehold on the 20-story building fronting the full block along Fifth Avenue between East 30th and East 31st streets to a partnership led by Tribeca Associates, according to sources.
While Tribeca’s plans for the 550,000-square-foot building weren’t immediately clear, many of the textile tenants who have long called the property home are already mobilizing to weigh their options.
“The biggest tenants in the building have for the most part joined the effort both to work with the new leaseholder and to explore options to relocate the industry to a new building or buildings,” said Jeff Kaufman, president of the New Jersey-based Avanti Linens and head of the Home Fashion Products Association industry group.
Kaufman – whose company has a showroom at 295 Fifth – said tenants occupying about 250,000 square feet at the building are working with Evan Margolin at Savills to either negotiate with the new owners or relocate as a group.
“Based on the economics, we know [new rents are] going to be significantly more than we’re paying now,” he said. “They’re looking for a different tenant group, we think.”
Margolin declined to comment on negotiations.
Representatives for Manhattan Properties, headed by president Lou Lombardi, and Tribeca Associates did not respond to requests for comment. Financial terms of the deal were not immediately available. A CBRE team led by Darcy Stacom and Bill Shanahan negotiated the deal for Manhattan Properties. The brokers declined to comment.
Tribeca Associates is teaming up on the acquisition with Meadow Partners and PGIM Real Estate – the property arm of insurance giant Prudential Financial.
Sources said the new owners could reposition their investment similar to other Midtown South properties such as the Toy Building near Madison Square Park, the hub of the toy industry at 200 Fifth Avenue that L&L Holding Company purchased in 2007 for $480 million and filled with tenants such as Grey Advertising, Tiffany & Co. and – of course – Eataly.
The textile tenants at 295 Fifth are paying rents in the ballpark of $50 per square foot, according to sources, who believe those figures could be pushed up into the area of $90 per square foot.
Tribeca Associates, meanwhile, has some experience with ground-leased properties. The firm – led by managing partners Bill Brodsky, Elliott Ingerman and Mark Gordon – teamed up with Meadow Partners in 2013 to buy the ground lease on the 30-story Bush Tower office building overlooking Bryant Park for $65 million. The partners sold a majority stake in the lease to China Vanke in 2015 for $125 million.
Tribeca also bought the leasehold on the 30 Broad Street office tower in the Financial District in 2016 for $130 million.