Online grocer Fresh Direct LLC has sold its long-time home in the Long Island City section of Queens to a developer, drawing an outsized price for a property in a rapidly gentrifying area, even though it can’t be converted into residences.
The 276,705-square-foot (25,707-square-metre) warehouse at 23-30 Borden Ave sold for $48 million, according to a person with knowledge of the property. The buyer is Atlas Capital Group LLC, an owner and developer of office, residential and retail properties in New York, Los Angeles and Miami, said the person, who asked not to be identified because the deal hasn’t been made public.
In a neighbourhood across the East River from Manhattan, where new luxury apartment and condominium towers are remaking the skyline, the Fresh Direct warehouse is located in a manufacturing zone where homes can’t be built. Marketing materials for the site, which includes an additional 129,847 square feet of unused development rights, suggest that could change someday.
“While immediate conversion or redevelopment of the property is not feasible, the rapid repositioning of Long Island City’s industrial/warehouse and manufacturing properties makes the prospect of future redevelopment highly likely,” according to the documents prepared by the marketing brokerage.
The Cushman & Wakefield brokers listing the site – Bob Knakal, chairman of New York investment sales, and David A. Chkheidze – declined to comment on the deal. Jeffrey Goldberger, a principal at Atlas, didn’t return a message left at his New York office. Fresh Direct’s public relations office didn’t respond to an email seeking comment.
Most of the priciest warehouse purchases in Queens have been by investors seeking to convert the properties to homes, according to Jim Costello, senior vice-president at New York-based Real Capital. Residential developers have been flocking to Long Island City after the 2001 rezoning of 37 blocks east of the waterfront abutting the Sunnyside Yard rail depot. The changes allowed higher-density towers within the manufacturing hubs of Queens Plaza and Court Square.
Fresh Direct is moving to a new warehouse that it is constructing in the Bronx. The company plans to lease its current space in Long Island City until the new facility is complete, according to the person with knowledge of the property.
News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.