Vornado Realty Trust bought the historic Otis Elevator Building on Manhattan’s far west side and plans to expand the low-rise property in a bet on increasing office demand in the area.
The purchase of 260 11th Ave. includes a 10,000-square-foot (930-square-meter) parking lot and additional development rights, the real estate investment trust said in a statement Monday. Vornado is paying for the purchase with about $80 million in stock units of a newly created operating partnership and will lease the ground for 99 years, making annual payments of $3.9 million. The seller wasn’t disclosed.
The deal for the property, located from 26th to 27th streets, opens up opportunities for Vornado in a Manhattan neighborhood with limited office inventory. The far west Chelsea area is filling up with technology and creative tenants that are drawn to vintage buildings with distinctive architecture, said Jim Costello, senior vice president at research firm Real Capital Analytics Inc.
“This area is due,” he said. “That’s sort of the way people think about it.”
Vornado’s acquisition is south of Related Cos’s $20 billion Hudson Yards project, where the upcoming 7 train extension will increase transit access. It’s across the street from the Starrett-Lehigh Building, leased to companies such as Martha Stewart Living Omnimedia Inc., Ralph Lauren Corp. and Under Armour Inc.
Vornado has the option to buy the land under the building for $110 million, according to the statement. The property is leased to the City of New York through 2021.
The seven-story Otis Elevator Building, completed in 1912, is in the West Chelsea Historic District, a collection of 30 architecturally distinctive structures that formed a center of manufacturing in the 19th century.
“On the west side, you have these older, funkier buildings you can renovate into something modern,” Costello said. “If that’s the kind of stuff tech firms want, this is the place to do it.”