Real estate investor Himmel + Meringoff Properties and financier Square Mile Capital have formed a joint venture that seeks to capitalize on surging demand for e-commerce fulfillment centers in New York City’s outer boroughs.
The companies spent $89 million to purchase a low-rise Bronx industrial property at 1601 Bronxdale Ave., which sits on 7.5 acres and spans 305,000 square feet. They plan to make improvements at the 87-year-old, two-story building that include its office component. The property is located just a mile from major transportation thoroughfares such as Interstate 95 and the Bronx River Parkway, a plus for logistics.
The purchase marks the launch of the firms’ acquisition program targeting mixed-use and industrial properties.
The partnership “intends to take advantage of increased local market demand for distribution facilities,” Square Mile Capital Chief Executive Craig Solomon said in a statement. He cited New York’s ongoing economic expansion and business activity as spurring further investment opportunity in developing neighborhoods.
In the Bronx, mass conversions and demolitions of industrial buildings over the past decade have led to a dearth of usable space – just as e-commerce has bolstered demand for distribution facilities. More than 1 million square feet of office space has been demolished, and overall inventory has declined since 2010, according to a recent CoStar industrial report on the Bronx.
“Rents, which have witnessed significant growth in this cycle and are now more than 50% above their pre-recession peak, remain on the continued upswing with the assistance of recent large move-ins from high-credit e-commerce tenants that have helped keep occupancy levels tight,” wrote CoStar’s Market Analytics. “The e-commerce boom has helped industrial rents boom across most of the metro, and most large submarkets in the area have recorded similar rent growth.”
The pace of investment has increased in recent years, averaging nearly $200 million annually in the past four years, while sales surged early this year, analysts noted. More than $130 million of Bronx industrial property traded in the first quarter.
In an email, Leslie Himmel, co-managing director at Himmel + Meringoff, said the 34-year-old firm is known for making value-add investments within New York’s emerging neighborhoods.
“We were early buyers, for example, in Long Island City in Queens, where we now own two properties, and in Manhattan, have long been owners south of Grand Central Station in the Flatiron District, which experienced its own renaissance shortly after we bought there,” she said. “As we look to the future, you will see Himmel + Meringoff continue to execute on our opportunistic acquisition program, funded by deep reserves of cash we’ve built through our strategic refinancing operations, and focused on more deals in areas still considered emerging in New York City, like the Bronx and the other boroughs.”