‍

THE PROPERTY

A 1930s Industrial Building with Exposed Heavy Timber and Masonry Brick, Repositioned as a 53,019 SF Creative Mixed-Use Campus in Long Island City's Court Square District

The Metropolitan Building at 44-01 11th Street in Long Island City, New York is a five-story building with a cellar level, totaling approximately 64,600 gross square feet and 53,019 rentable square feet on a 0.21-acre site. Built in 1930, the building retains a distinctive exposed heavy timber and masonry brick structure, with tall ceilings throughout, oversized historic window openings, skylights, and the potential for rooftop activation. The property was acquired by the sponsor in February 2022 for $250,000, simultaneously with entry into a 99-year ground lease with the owner of the underlying land. The ground lease carries an annual payment of $450,000, with 10 percent step-ups every four years beginning in 2030. The building sits directly adjacent to the 12th Street Public Plaza, a pedestrian-only corridor that anchors the sponsor's broader campus redevelopment in the neighborhood.

The repositioning plan called for an extensive renovation of the existing structure, including facade work and replacement of the oversized historic windows throughout, elevator modernization, asbestos removal, and comprehensive upgrades to the mechanical, electrical, and plumbing systems. The total construction budget was approximately $6.4 million, structured with the sponsor funding their equity portion first before RRA's capital expenditure holdback would begin disbursing. Total construction was planned over a 10-month period. The building benefits from enrollment in New York City's Industrial and Commercial Abatement Program (ICAP), a 25-year tax abatement under which the property is 100 percent exempt from real estate taxes for the first 21 years, after which the exemption phases out in 20 percent annual increments.

The repositioned building is organized by use across its floors. The cellar and ground floor, totaling nearly 20,000 square feet, were leased to New York Studio Factory under a 15-year term, establishing a long-duration anchor for the building's creative-industrial identity. The second through fourth floors are subdivided into smaller suites, accommodating a range of creative, professional, and fitness-oriented tenants, including Somerset House on the fourth floor. By February 2025, approximately seven months after the loan closed, the building was 92 percent leased.

THE RRA SOLUTION

$7,500,000 First-Position Leasehold Loan Structured with Zero Proceeds at Closing, All Funds Held Back Until the Property Achieved 70% Leasing

RRA provided a $7,500,000 first-position loan closing July 18, 2024, secured by the sponsor's leasehold interest in the property. The loan structure was designed specifically around the sequencing of the business plan: no proceeds were advanced at closing. All $7.5 million was held in reserve, with the first draw conditioned on the property reaching at least 70 percent leasing. This structure ensured that RRA's capital was deployed into a building already substantially leased, materially reducing lease-up risk prior to any funding event.

Once the leasing threshold was met, the loan's holdbacks became available in four components: $4,500,000 allocated for capital expenditures (with the sponsor required to fund their pro-rata equity portion before any RRA draw could occur), $1,000,000 for tenant improvements and leasing commissions, $1,000,000 for an interest reserve funded concurrently with the first draw, and a $1,000,000 performance earnout released in two tranches tied to debt yield milestones. The first $500,000 of the earnout is released upon the property achieving a 13 percent debt yield on the full commitment, and the remaining $500,000 upon a 15 percent debt yield. As of recent reporting, $6,065,000 of the $7,500,000 commitment had been advanced.

THE LOCATION

2.5 Blocks from Court Square Station (G / M / E / 7 Trains), Positioned Between the LIC Waterfront, Downtown Court Square, and Queens Plaza

The property is located in Long Island City, the westernmost neighborhood of Queens, New York, in the Court Square Industrial Business Zone. The building sits at the intersection of three of the neighborhood's most active districts: the LIC waterfront to the west, the dense commercial core of Court Square to the north, and the Queens Plaza transit hub to the northeast. Court Square Station is 2.5 blocks away, providing access to the G, M, E, and 7 subway lines and placing the building within minutes of Midtown Manhattan, Downtown Brooklyn, and both LaGuardia and JFK airports. Long Island City has been one of New York City's fastest-growing urban submarkets, outpacing the rest of the city in population growth by approximately 22 percent since 2000, driven by a sustained influx of residential, commercial, and mixed-use development.

The property sits directly adjacent to the 12th Street Public Plaza, a pedestrian-only outdoor corridor surrounded by a variety of food, beverage, and retail operators that have opened in recent years, including Focal Point Beer, Ninth Street Espresso, and Lupo Rosso Pizzeria. The plaza forms the backbone of what the sponsor calls the 12th Street Campus, a multi-phase redevelopment effort in which this building represents the fifth and final phase. The campus's established character as a creative and culinary destination, combined with the building's proximity to four subway lines and the LIC waterfront, directly supported the repositioning strategy and contributed to the building's rapid lease-up following close.

THE MARKET

Northwest Queens Office Submarket: Vacancy Declining Since Q2 2021, Rent Growth Positive Since Q3 2022, with Light Industrial and Creative Uses Outperforming Traditional Office

The Northwest Queens Office Submarket was used as the closest available proxy for market conditions at underwriting, though the property's light-industrial and creative mixed-use positioning distinguishes it from typical office product. Office vacancy in the submarket had risen steadily from 2014 through its peak in the second quarter of 2021, and had declined approximately 150 basis points since. Asking rent growth turned negative in the third quarter of 2020 and remained so through mid-2022, then returned to positive territory. At underwriting, annual asking rent growth was approximately 1.0 percent year-over-year.

The Industrial Business Zone designation of the Court Square submarket limits the range of competing uses that can enter the market, preserving its light-industrial character and restraining new supply of the product type the Metropolitan Building offers. The combination of demand from creative tenants, production companies, and fitness operators seeking affordable, high-ceilinged loft space in proximity to Midtown Manhattan has proven more resilient than conventional office demand. The speed of the building's lease-up, reaching 92 percent occupancy within seven months of closing, reflected the depth of that demand in a market where the right product is demonstrably undersupplied.

THE SPONSOR

A New York City-Based Joint Venture of an Experienced Development Firm and a Full-Service Construction Company, Executing the Fifth and Final Phase of Their Long Island City Campus

The sponsorship is a joint venture between two established New York City firms, one focused on mid-to-large-scale development projects across the tri-state area with an in-house construction management arm active since 2012, and one a full-service development, construction, and contracting company founded in 1990 with over 100 employees and a background spanning affordable housing, infrastructure, civil construction, and market-rate residential development. The two firms have collaborated across multiple phases of the 12th Street Campus, and their combined capabilities in design, construction management, and leasing were central to the loan underwriting.

The Metropolitan Building represented the fifth and final phase of the campus development, a project the joint venture had been executing incrementally for several years by the time RRA's financing closed. Their institutional knowledge of the block, existing relationships with the 12th Street Plaza's operator community, and demonstrated ability to attract and execute long-form leases with creditworthy creative tenants made the underwriting substantially more confident than a first-time repositioning of a 1930s industrial building in a leasehold structure would otherwise warrant.