With all the recent uncertainty
in the stock market, real estate is looking like a very favorable asset class. It’s the only
hard asset which cash flows, as gold and other commodities purely benefit from
appreciation. Decent returns are
available in Manhattan.
Receiving a 6-7% return with long term upside is an attractive alternative to
parking money in treasuries.
I was just involved in the sale of the restaurant condo at 115 Allen Street on
the Lower East Side which closed yesterday. At $2,325,000, it sold for an
in-place 6.8% return. Retail condos, especially restaurants,
sell at higher returns than residential as they are viewed as having more risk.
Even the most popular restaurants can come and go, so investors usually factor
in reserves if the space needs to be re-tenanted.
115 Allen is
located just off the northwest corner of Delancey Street and Allen Street. The restaurant condominium is
occupied by the restaurant/bar, Mary Queen of Scots. The
operators are parlaying their success from their first restaurant in the West Village,
named Highlands. There is a new ten year lease in
place with 3% annual increases and all real estate taxes paid over the base
year 2010/2011. The space is approximately 1,800 SF on the ground and 1,110 SF
on the lower level. The
space recently underwent a $1,500,000 build out, which included
a newly installed kitchen. The current restaurant owners have a full liquor
license.
Visit The Full Nelson blog at NYInc for the rest of this article