Archstone to Buy NY Building
Archstone-Smith, the nation's seventh-largest apartment company, is expected to announce today its entry into New York City with a $210 million acquisition of a high-rise, upscale apartment building on the Upper West Side. The acquisition would make Archstone-Smith the first multifamily real-estate investment trust to own an apartment property in Manhattan, the nation's most competitive market. Atlanta-based Post Properties Inc. has two apartment projects in Manhattan under construction. Denver-based Archstone-Smith, which also owns properties in markets including Boston, Chicago, Washington, D.C., and Southern California, says it signed a deal yesterday with a New York-based developer to purchase the 506-unit building, located at 101 West End Ave. near Lincoln Center. The building contains three levels of parking and retail space on the first floor and consists of studio, one- and two-bedroom luxury apartments with rents ranging between $2,350 and $8,590 a month. "About 70% of residents in New York City rent their housing as opposed to own," says R. Scot Sellers, chairman and chief executive officer of Archstone-Smith, citing U.S. Census Bureau statistics. "Just having a community where rental housing is so important and where it's so difficult to add new supply, is very attractive to us."
The REIT declined to identify the seller. But the owner of that property is listed as developer Tishman Speyer Properties Inc., according to Corcoran Group, one of New York's largest brokerage firms. A spokesman for Tishman Speyer declined to comment. Archstone-Smith is entering New York at a time when the city is struggling to recover from Sept. 11. Mass layoffs in the financial-services sector have hurt demand for apartments. "If things continue to remain weak in the financial-services industry, that will put pressure" on apartment occupancies, says Steve Sakwa, REIT analyst at Merrill Lynch in New York. Apartment vacancies in Manhattan rose to 3.7% in the first quarter from 1.5% a year earlier, according to Reis Inc., a New York real-estate research firm. "We know this will be our most challenging market," Mr. Sellers says, "but Manhattan represents a tremendous long-term opportunity for us and we are committed to making it an important component of our national portfolio."