In what’s by far the splashiest retail real estate deal Manhattan has seen in years, Blackstone is set to acquire a portfolio of Soho retail properties for a cool $200 million. Such a deal just goes to show: retail, the ugly duckling of the industry, is starting to look more like a swan again.

It comprises a portfolio of properties leased to well-known tenants such as Patagonia and Amiri—a brand practically synonymous with celebrity closets. For scores, this is the single largest investor-led retail transaction in Manhattan since 2021.

How did we get here? And why is Blackstone dropping nine figures on buildings in a neighborhood that, just a few years ago, felt like it might as well have been wearing a “For Lease” sign around its neck? Let’s dive in.

A Second Act for Retail Real Estate

To appreciate this deal as being anything remotely close to a big deal, we have to rewind the clock. One has to recall that back in 2016, retail property was hot—until the bursting of its bubble. Suddenly, nobody wanted to go anywhere near it. Vacant storefronts started popping up faster than coffee chains do in a gentrifying neighborhood, and investors started treating retail properties as though they were taboo.

Fast forward to today, and the landscape looks a little brighter. Leasing activity has picked up, rents are climbing steadily, and investors are dipping their toes back into the market. In the case of Blackstone, they’re not just dipping toes—they’re doing a full cannonball.

The Properties: Soho’s Finest

So what is Blackstone buying, exactly? The portfolio comprises four retail buildings scattered about Soho, each with a bit of flair of its own. Included in the bunch are:

61 Crosby Street and 72-76 Greene Street: This building is jointly owned by ASB Real Estate and L3 Capital of Chicago.

465 Broadway: By famous architect Jean Nouvel, because even retail spaces deserve a little architectural pizzazz.

415 West Broadway: Perhaps one of the choicest pieces of real estate in one of New York’s most sought-after neighborhoods.

While retail tenants occupy these properties, the same properties also have office areas; in fact, more than half of the square footage consists of office space.

Why Buy Now?

This isn’t an accident of timing. Ever the opportunist, Blackstone sees upside in Soho’s retail market. Many of the current retail leases are below today’s market rates. In plain English, this means there’s room to jack up rents and make a tidy profit.

As Elena Clarfield, senior associate at Blackstone Real Estate, put it best: “This acquisition shows how we can play offense in today’s market and find amazing opportunities in prime locations.” Translation: Blackstone’s calling the shots, and they think they’re about to score big.

But it’s not all about the rents. Soho’s retail scene has also been on fire, particularly along the Broadway corridor, with demand hot as a sidewalk in July. Rents in the area leapt 35% year-over-year, reaching an average of $679 per foot.

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ASB’s Strategy: Out with the Old

It is not the case of the seller, ASB Real Estate Investments, walking away empty-handed; they had shelled out $204 million in the first place for these properties over a four-year spree starting in 2012. Now they’re cashing out to focus on other areas.

As ASB’s chief executive, Robert Bellinger, put it: “We’re moving away from office investments and putting our chips on industrial, apartments, and self-storage.” Translation: We’d rather bet on warehouses and storage lockers than office buildings right now.

This asset class shift is in line with the broader trend. Since 2021, ASB has sold $870 million of office properties throughout the United States. They are not only getting rid of their assets but also rebalancing their whole investment portfolio toward markets that show stronger growth potential.

The Rebirth of Soho: From Ghost Town to Goldmine

At least for those who haven’t walked Soho’s streets lately, it may come as a bit of a surprise to hear that the area is thriving. After all, wasn’t it only a couple of years ago that vacant storefronts seemed to outnumber tourists?

Thanks to a “flurry of leases,” the neighborhood has bounced back in style, as retail availability plummets and rents rise. In fact, the average pricing topped $600 per square foot for the first time since 2017, leading the pack along the Broadway corridor, CBRE’s latest third-quarter report said.

One could say that Soho is that friend who got through a bad breakup but now has a hot new job, killer wardrobe, and a hot date lined up every weekend.

Biggest Deal Since 2021

Blackstone’s $200 million purchase isn’t just a big deal—it’s the biggest investor-driven retail deal Manhattan has seen in over three years. The last comparable transaction came at the end of 2021, when Aurora Capital Associates snagged a retail condo at 530 Fifth Avenue for $192 million.

For those keeping score, the seller in that transaction, Brookfield Property Partners, had paid $295 million for the property when the market was hot in 2014. Ouch. Timing, as they say, is everything in real estate.

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