Barone Puts Recently Developed Long Island City Office Building In Bankruptcy
A 3-year-old, 86K SF office building in the trendy Queens neighborhood of Long Island City has been placed into bankruptcy by its owner.
Barone Management filed for Chapter 11 bankruptcy protection last week for the building at 9-03 44th Road. Documents filed in the Bankruptcy Court for the Eastern District of New York show the building has between $10M and $50M in assets and liabilities.
Scott Barone, founder and principal of Barone Management, confirmed to Bisnow by phone that the property is in Chapter 11 but declined to comment further. PincusCo first reported the filing.
The building is being marketed for sale by Ripco Realty, with an asking price of $31.5M, according to a marketing brochure. Ripco officials didn't immediately respond to Bisnow’s request for comment.
The building’s tenant roster includes air conditioner manufacturer Daikin Industries and Montana Datacom, which distributes American-made electrical, data, transit, telephone, conduit, video, fire alarm, security and industrial products, according to the brochure.
Barone's three-story office property, which also has industrial space on the ground floor, received its certificate of occupancy in March 2021. When the developer signed the 99-year ground lease in 2014, however, it had initially filed plans for a 199-unit hotel.
Its plans for the property changed in 2017 when Barone Management structured a lease deal with the New York City Industrial Development Agency.
The lease deal with the IDA was structured so that Barone Management leased the property from its fee owners, John and Michael Koullias. Barone Management was then in charge of operating the building and would lease out the space to the IDA. The IDA would then sublease the property back to Barone Management, and in turn, Barone would then sublease to industrial, light manufacturing and office tenants.
At the time of the 2017 deal, Barone Management scored a $23.7M loan from Whitestar Advisors and filed plans for an office building instead. The developer refinanced with a $32M loan from Columbia Pacific Advisors and Metropolitan Commercial Bank in 2021. The loan was divided into $17M from Metropolitan Commercial Bank and a $16M preferred equity stake from Columbia Pacific Advisors.
The filing named Columbia Pacific Advisors, Metropolitan Commercial Bank and the NYC IDA as the property’s creditors.
Barone Management’s struggles at 9-03 44th Road come as many developers that built offices in Long Island City struggle to land tenants.
Vacancy in Class-A buildings in the area was 43.1% at the end of 2022, according to Cushman & Wakefield, while overall vacancy hit a new record of 28.6%.
Last year, BentallGreenOak and Related Fund Management defaulted on their mortgage on two buildings, the Paragon Building at 2100 49th Ave. and the Blanchard Building at 2109 Borden Ave., and handed the keys to the properties over to their lender as a result.
