Shafran and Fierro of Citicore represent Dalan Management in $36 million acquisition of two Midtown South office properties

Dalan Management paid $36 million for two Midtown South office properties comprised of 22 full-floor office lofts and ground-floor retail space as part of a 1031 exchange. The 12-story buildings are located at 10 and 12 East 33rd St. between Madison and Fifth Aves. Timour Shafran and Phil Fierro of Citicore represented Dalan in the deal. Pavan Uttam of UP Real Estate Advisors represented the seller, Adee Associates. Daniel Wrublin, Dalan Management's co-founder and principal, said his company bought the buildings after selling three Washington Heights buildings in November for $16 million. The East 33rd buildings comprise 61,100 s/f and can be converted into residences or a hotel. Brian Hosey from Marcus & Millichap marketed the properties for $35 million before the owner took them off the market. Since the summer, Adee Associates has maintained a $40 million asking price according to Shafran. Adee bought the properties in the 1980's. Each building includes a 2,000-square-foot store. The #10 building's retail space is occupied by a nail salon, paying $52 a foot on a lease expiring in 2021 and the #12 building has a dry cleaning business paying $60 a foot on a lease expiring in 2018, according to Shafran. "The 10 building is primed for converting," added Shafran, because the office leases expire by 2016 and there is potential permanent access to light and air on three sides if the buyer obtains an easement. The last lease in the #12 building expires in 2019. According to Shafran, the buildings are not ideal for combining as they don't line up exactly and the #12 building is union-run, while the other is not. In the short run, Dalan plans to just update the spaces, said Wrublin. "Down the road the potential is to convert the site or sell it to somebody to convert it," he said. Dalan has tapped William Cohen and David Emden of Newmark Grubb Knight Frank to market the office space.