Rezoning makes Hudson Yards office building a hot property.

330 West 38th Street, a magnificent 16-story Art Deco commercial loft office building with penthouse, 99% occupied by 109 tenants, has just traded through Eastern Consolidated for the third time in the past nine years, fetching a price of $51 million.

Eastern Consolidated's Alan P. Miller, director, together with co-broker Shimon Shkury, Massey Knakal Realty Services partner, exclusively represented the seller, Grunberg Realty, a New York City-based owner/ manager of office properties, while Eastern's Daniel Volk, associate broker, procured the purchaser, Hudson 38 Holdings LLC, a Manhattan-based real estate investor. Paul J. Nigido was the analyst on the deal.

Brian Ezratty, vice chairman and principal of Eastern Consolidated, initially sold the building to C&K Properties in 1998 for $8 million. It then traded for $30 million in 2003 when Ezratty exclusively represented C&K in the sale of the property to Grunberg Realty, the buyer, who was procured by Miller. That transaction meant C&K nearly tripled its investment in five years, while the current sales price of $51 million represents a 70% return on Grunberg's investment in only three years.

Said Miller, "The newly-created Hudson Yards zoning district on Manhattan's Far West Side means that the former manufacturing area is now slated for major residential and commercial redevelopment. It is not surprising, therefore, that 330 West 38th Street, which enjoys 150 feet of frontage in the heart of the area, fetched such a sizeable sum.

"Moreover, the building stands to substantially increase in value further as construction of new residential projects and commercial/hotel developments gets underway," added Miller.

According to Volk, "Now that the new zoning rules are in effect, Hudson has numerous options for 330 West 38th Street, including maintaining it as a commercial asset with excellent cash flow, or converting it to a residential condominium in the future."

The sale of 330 W. 38th Street was a cooperative effort. Volk had previously completed deals with Hudson and on this transaction worked with Miller and Susan Donahue of Grunberg Realty, the building's manager, to close the deal 30 days after having signed the contract.

Donahue originally managed the property when she worked for C&K Realty and was later hired by Grunberg to stay on as manager after its acquisition of the building in 2003. She will continue to manage the property through Grunberg under the direction of its new owner.

Built in 1927, the $51 million sales price for 330 West 38th Street translated to a 7% initial return based on current NOI, and represents one of the few substantial New York City buildings to trade at such a high cap rate in the past few years. Moreover, both Volk and Miller predict that rents should increase by 20-25% over the course of the next 12 months.