Zero Irving, a newly developed New York mixed-use office building, is looking to have its leasehold interest sold or equity partners added.
The brokerage Newmark has been retained to sell or recapitalize the leasehold interest in the trophy tower at 124 E. 14th St., according to a Newmark marketing brochure obtained by CoStar News. The 268,560-square-foot property is fully leased with tenants.
A leasehold owner typically keeps control of the building itself, collecting rent from its tenants while paying ground lease rent to the fee interest owner.
The planned sale comes as New York’s office market has seen signs of a rebound. The Union Square area where Zero Irving sits, for instance, has experienced a rebound in worker visits and foot traffic, ground-floor leasing, and consumer spending, a study found.
The building was completed in 2022 by RAL Cos. and JRE Partners in response to a New York City Economic Development Corp. competitive request for proposals process. The joint venture partners have invested over $200 million into the development, according to real estate firm JLL, which said in August the building was fully leased.
RAL has a 99-year ground lease with the NYCEDC on the city-owned land, a RAL spokesperson previously told CoStar News.
The "building is now well leased," Adam Spies, Newmark’s co-head of U.S. capital markets and part of the Newmark team that’s leading the sale, told CoStar News in an email, without elaborating. The ownership group that developed the building has executed its business plan, he said.
RAL declined to comment.
The 21-story property has a 13-year weighted average lease term and generates over $285 million in contractual rent with no near-term capital required, Newmark said in the brochure, adding the property counts among features “museum-quality design” and a ground-floor food hall.
Zero Irving’s tenants include financial technology firm Melio, software company Sigma Computing, and Civic Hall, an almost 85,000-square-foot digital training and events hub run by the Fedcap Group, a nonprofit organization that provides vocational, educational, and other services in a 25-year lease.
Fedcap’s government-backed lease, which anchors the lower floors of the building, provides “accretive tax savings,” Newmark said, adding the building’s height and boutique floor plates spanning 12,000 to 15,000 square feet “maximize” light and air. Amenities at the building, atop New York’s fourth busiest subway station at Union Square, include private terraces, an indoor and outdoor rooftop sky lounge, an event center, and a gym, Newmark said.
Union Square saw an average of 370,000 daily trips last year, a 4% increase in foot traffic from 2023, according to the Union Square Partnership, a business improvement district. Consumer spending in the area also rose 5% last year, led by restaurants and bars, entertainment venues, and retail shops. Some 49 new ground-floor businesses have opened in the district last year with 18 coming soon, the BID said. Meanwhile, there was a 20% increase in worker visits in the fourth quarter, a sign of more workers returning to the workplace.