New York City-based real estate investment and development firm Sioni Group has acquired a twelve-storey office building in New York's Flatiron District for $31 million. This is according to city records, which confirm the purchase.
Sioni, whose portfolio primarily consists of residential properties, purchased the property at 38 West 21st Street from Jack Vogel Associates. A corresponding deed was filed in the land registry offices last Monday. Jack Vogel Associates had owned the property since 1968.
Marci Kaufman, who signed the contract on behalf of Jack Vogel Associates, was not available for comment. Payman Yadidi of the Sioni Group signed the contract for the buyer, according to the documents. Bob Knakal of BKREA represented the seller in the transaction, together with Faraz Cheema and Ryan Candel. BKREA had listed the property, built in 1908 within the Ladies’ Mile Historic District, as a potential candidate for conversion from office to residential use.
Decline in Office-to-Residential Conversions
Although an office-to-residential conversion was an option, demand for office space may be regaining the upper hand, according to Knakal. Knakal explained that over a period of four to five months, every buyer was looking for a residential conversion. However, in the last three weeks of marketing, there were five office investors who outbid each other, which was very advantageous for the seller due to the competition.
The lesson to be drawn from this is that the peak of office-to-residential conversions has now passed, Knakal added. He stated that this does not mean such conversions will no longer take place, as they have existed for decades and will remain relevant in the future. However, the highest volume in this area is behind us.
The Sioni Group was among the buyers who intended to continue using the building as an office building and to renovate it accordingly, Knakal said. The Sioni Group, which also operates under the name Sioni Capital, acquired the building on 21st Street between Fifth Avenue and the Avenue of the Americas with a $21 million loan from Valley National Bank, according to land registry records. A request to the Sioni Group for comment remained unanswered.
Office Sector Recovery
Knakal noted that the vacancy rate had fallen from 20 percent to approximately 12 percent due to positive absorption and these conversions, which is close to equilibrium. Activity in the office sector has increased significantly. It is currently unclear whether the building is leased to office or retail tenants.
