Opportunity has knocked on the Blue Man Group’s door.
The performance art company’s property at 48 Clinton St. will be the first in Manhattan to be sold to a Qualified Opportunity Fund in an Opportunity Zone.
The small mixed-use building, with 5,467 square feet, sits on the Lower East Side between Stanton and Rivington streets on the east side of the block.
The buyer, Dr. Arani Bose, is the co-founder of the medical device company Penumbra. Under Opportunity Zone rules, he will be investing a gain from another investment vehicle and intends to redevelop the building for his private foundation, the brokers said.
Michael F. DeCheser, Patrick Dugan, Mei Ling Wong, Andrew T. Berry and Bryan Hurley of Cushman & Wakefield marketed the building for the performance group, which was itself bought by Cirque du Soleil last year.
The pricing was $988 per square foot, but its 4,653 square feet of development rights can bump a new project to 10,120 square feet, so the raw pricing drops to $534 per buildable square foot.
The four-story building has been owned by entities of the Blue Man Group for a decade. There is a residential duplex upstairs with terraces, while the lower two stories have served as a production and recording studio.
The recording facility, LoHo Studios, has been used by Phish, Willie Nelson, John Mayer, Joey Ramone, Phish, Patti Smith, Lindsay Lohan, OAR, Art Garfunkel and Joan Jett.
Hurley said the property is located in one of just three small Opportunity Zones on the Lower East Side. Since the new US law designated such zones across the country, the pool of buyers for these properties has widened to more than just real estate investors seeking 1031 tax-free exchange purchases.
“We put up a sign in September and the buyer was walking by and called off [of] the sign,” said DeCheser.
According to Anchin CPAs’ Marc Wieder and Jeffrey Bowden, any seller of a home, apartment, stock, collectible, art or business is able to roll their gains into an Opportunity Zone project.
Over time, such an investment allows investors to both step up the tax basis on the gain and defer the taxes.
That’s why investors are now pumped up about rolling gains into real estate that can be redeveloped. DeCheser and Hurley are marketing another Lower East Side Opportunity Zone property at 347 E. 4th St. for $3.5 million. This is a commercial building that’s a candidate for a residential conversion and is now getting more investor interest, DeCheser said.
