BROOKLYN — Instead of ambitious plans to turn a big Red Hook industrial waterfront site into a glassy tech office compound, the site’s existing warehouses will be modernized and used as facilities to store items purchased online for quick delivery in NYC.
Italian developer’s Est4te Four's high-profile $400 million plan for a 1.1 million square-foot office complex is off the table.
The firm closed on a sale Tuesday of several commercial buildings to Sitex Group, an Engelwood, NJ-based company that specializes in buying industrial real estate and renting out space to big box stores and e-tailers, which are increasingly focused on distribution sites closer to their customers for speedy deliveries, explained Brian Milberg, a principal at Sitex.
Milberg said Monday his company is paying a “pretty hefty number” for the site but declined to disclose the specifics as the deal had not totally been finalized for the purchase of 219 Sullivan Street, 68 and 100 Ferris Street, and 202 and 242 Coffey Street.
The Observer, which first reported the deal, estimated the price was $110 million.
Ranee Jaber, of DY Realty, who brokered the sale, was not at liberty to disclose the price, but said the reported price was "not far off." The warehouses, totaling 350,000 square feet, will be re-branded as the Red Hook Industrial Center, according to the firm.
“We buy and reposition properties into modern distribution centers. Our model is finding these close-in and industrial locations for distribution,” Milberg told DNAinfo on Monday. “It’s probably one of the most sought-after sectors because big box retail is going to a distribution- instead of a storefront-model. Everyone wants packages at their door the same day or next day.”
As buildings across the city are renovating their lobbies to keep up with the onslaught of packages as more tenants are shopping online, the companies selling the products are also looking for ways to be closer to their customer base, said Milberg.
As a sign of confidence in demand, his company has invested close to a $1 billion to acquire and develop industrial real estate since 2002, but this would be the firm’s first project within New York City limits.
Sitex is seriously looking at other New York City sites, he said.
“What’s great about these projects is that they’re pretty labor intensive,” Milberg said, estimating that they will likely result in anywhere from 200 to 500 jobs.
Sitex plans to modernize the buildings, including enhancing facades, upgrading sprinkler systems and redoing parking lots. Milberg doesn’t believe the truck traffic will pose big problems considering that current tenant at the site, Snapple, likely has a busy route from the center. (Snapple's lease is almost up, Milberg noted.)
The Milan-based Est4te Four, which bought the properties for $66 million in 2014, had trouble getting investors to sign on to its tech hub plans since the neighborhood had little track record for office space and because of the geography in a flood zone more than a mile and a half from the nearest subway, according to the Observer.
Est4te Four’s parcel nearby at 160 Imlay St. — the long-delayed conversion of the 1910 New York Dock building into luxury residential on upper floors with lower floors reserved for commercial use — was not part of the sale.
Requests to Est4te Four for comment were not returned.