New York REIT plans to boost income by increasing occupancies at its properties and raising rents where leases are below market rates, according to Schorsch. “It’s an extraordinary time in the market,” he said. “We think there’s a lot of upside.”
Office rents in Manhattan are climbing as employment improves and growing technology and media companies seek more space. Landlords sought an average of $65.10 a square foot in the first quarter, up 8.6 percent from a year earlier, according to brokerage Studley Inc. The availability rate, a measure of empty space and offices scheduled to become vacant in the next 12 months, was 11.4 percent, down from 12.6 percent.
Growth Potential
New York REIT, which will be listed under the symbol NYRT, has diversified in Manhattan by buying in submarkets that have good growth potential, said Woody Heller, an investment-sales broker at Studley, which arranged the purchase of an office building on West 38th Street for Schorsch’s company.
Among the landlord’s properties is 218 W. 18th St., an office building in midtown south, the area where demand from technology firms has helped tighten vacancies and push up rents. The 166,000-square-foot property is 84 percent occupied.
Buying real estate in New York isn’t without risk. Office- building values in Midtown fell 55 percent from the highs of the commercial-property boom to the bottom in 2009, according to an index by Newport Beach, California-based research firm Green Street Advisors Inc. The gauge has gained back most of those losses, coming within 9 percent of its 2007 peak last month.