Illustrating its bullish outlook on the recovery of New York City, KPG Funds (“KPG”) announced that they have entered into a 99-year ground lease at 132 West 14th Street in Greenwich Village. Formerly utilized as auxiliary space by the Salvation Army, KPG will control the leasehold of the property and plans to develop a contemporary class A office development named La Gallerie, which will include an expansive lobby that also serves as an art gallery for its tenants, displaying some of the most influential street artists of the 21st century.

Avison Young Principal and Head of Tri-State Investment Sales James Nelson along with Principals Charles Kingsley and Erik Edeen and Associate Alexandra Marolda represented Salvation Army in the negotiations along with Andreas Metzger from The Corcoran Group who advised.

“This agreement created an opportunity for the Salvation Army to repurpose space that we weren’t occupying in an avenue that will enhance the surrounding neighborhood while generating revenue,” said Col. Ricardo Fernandez, Division Commander of the Salvation Army’s Greater New York Division. “Having consolidated our offices and programming in our executive headquarters building just next door, we look forward to seeing KPG’s plans for the building unfold and create new local opportunities.”

The property is located on the flourishing block between 6th and 7th Avenues, a prime location near numerous public transportation hubs. The building offers sweeping city views and will be completely transformed into a high-end bespoke offering with all the modern amenities needed to attract tenants in a post-COVID world.

This ground lease represents KPG’s faith in the New York City market. “The pandemic year created extraordinary opportunities for those that steadfastly believed in a NYC recovery” said KPG co-founder and CIO Rod Kritsberg. “This is the greatest city in the world and we never questioned if NYC was coming back, but when. By ignoring the headline news and noise we are being rewarded with the ability to enter into a long-term ground lease in a prime location and create a KPG-style building unlike anything in the market.”

KPG expects to do many deals in 2021/2022 as it is fully confident that the city has bounced back strong—and soon—from the losses it suffered during the Coronavirus pandemic.

KPG’s 99-year ground lease and development plans for 132 West 14th Street represents a new post pandemic chapter for the NYC office market, said Greg Kraut, co-founder and CEO of KPG. “Having the opportunity to control the leasehold of such a well-located asset with the opportunity for redevelopment was too good for us to pass up. The idea that office is dead in NYC is nonsense. Office is just being redefined in 2021 by landlords who provide a bespoke experience that employers need to give to their employees.”

Avison Young’s Nelson added, “132 West 14th Street provided one of the most comprehensive redevelopment opportunities in the city, comprising over 55,400 rentable square feet with build to suit potential in a submarket with excellent leasing fundamentals. We anticipate this agreement will bode well for both parties as KPG’s plans for La Gallerie will create cash flow while increasing the building’s value.”