11 West 19th Street, New York, NY

Savills represented Block Buildings in arranging $62.5 million in first mortgage financing for the client’s acquisition of 11 West 19th Street, a 256,000 square foot Class B office building in the Union Square/Flatiron district of New York.

• When the seller initially conceived of putting the property up for sale, it anticipated that it would receive the highest pricing from residential converters. Consequently, it had let the occupancy decline so it could deliver the property substantially vacant.
• Savills’ client, however, recognized that the surrounding office market was strengthening faster than the residential market and conceived of a plan to upgrade the property and reintroduce it as a higher quality office property. Based on that plan, it was able win the bidding and put the property under contract.
• Block’s counterintuitive strategy provided several challenges from the point of view of arranging financing, however. The property was more than 40% vacant and even more leases were due to expire within the near term. In addition, while many lenders felt comfortable offering residential conversion loans for properties in the Union Square/Flatiron submarket, few initially bought into the wisdom of repositioning the property as upgraded office space.
• Based on a carefully structured marketing campaign built around a statistical analysis of the strength of the office submarket that supported the client’s office repositioning strategy, Savills generated considerable interest for the loan among a variety of