The Reel

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A blog for breaking sales and neighborhood real estate news.

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.

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