After purchasing the Falchi Building in Long Island City at the end of last year, Savanna has begun to revamp it.
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Savanna announced on Monday that it has commenced work on a $35M capital improvement project to upgrade the building's systems, modernize its lobby and common areas and reconfigure the retail component.
Among the current retail tenants on the ground floor are Juice Press and Stolle Bakery & Cafe. Savanna said it has reached an agreement with one current retail tenant to renovate its 22K SF store, and the redone lobby corridor will include retail countertops to update the food-focused corridor designed in the style of Chelsea Market. Work on that component is expected to be finished in early 2018.
Savanna will also build a 7,500 SF marketing center on the second floor to show off the building's design, configuration and appliances.
The five-story, 711K SF office building, which takes up a full block in the center of Long Island City's Factory District, is 85% leased, Savanna said. Office tenants include Uber, Lyft and the New York City Taxi and Limousine Commission, with 150K SF available today. A 95K block of space on the fifth floor, which includes a 3K SF penthouse and the potential for a roof deck, will become available by the end of 2018.
Savanna purchased the Falchi Building from Jamestown Properties for $255M in a deal that closed in December 2016. Jamestown bought the property from The Chetrit Group in 2012 for $81M, and completed its own renovations to increase value substantially before flipping it to Savanna.
Teams from Cushman & Wakefield will be marketing both the office and retail components to potential tenants, and Savanna hopes that its quick improvements ahead of the considerable developments in the pipeline in Long Island City can lure tenants from across the East River before office rents begin to spike.
Savanna Director of Leasing Brian Reiver estimates that New York's Relocation and Employment Assistance Program, which gives incentives for businesses moving from Manhattan below 96th Street to points north or to the outer four boroughs, provides a discount of $15 to $20/SF relative to Manhattan on top of the savings inherent in moving away from the city's most expensive areas.
CORRECTION, DEC. 4, 5:10 P.M. ET: A previous version of this story said that the $15-20 discount between Manhattan and Long Island City was only partially due to the REAP incentive, rather than entirely, and that renovations would create the retail corridor rather than update it. This story has been updated.
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