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Madison Marquette, Grosvenor Buy Property From Starwood

Starwood Urban has sold most of its $500 million portfolio in the past two weeks to Madison Marquette and Grosvenor, allowing both companies to further expand their retail presence.

Grosvenor purchased 460,000 sq. ft. of property in Washington D.C. from Starwood, including 200,000 sq. ft. of retail, for more than $200 million. Madison Marquette, in partnership with SSR Realty Advisors, acquired 54 properties with 400,000 sq. ft. for $120 million. Half is comprised of retail sites in Florida, New York, Massachusetts and Connecticut.

"We feel these are good, quality properties," said Jay Lask, senior vice president of acquisitions for Madison Marquette. "We like the product type: urban retail and street retail. It's a product type we would like to more involved with."

Madison Marquette's new properties include 430 W. 14th Street in New York City, where famous nightspot Hogs & Heifers and clothing boutique Scoop are housed. The deal also involves eight retail buildings with 79,000 sq. ft. along Coral Gables' Miracle Mile, where tenants include Starbucks, Atlanta Bread Co. and Radio Shack.

The firm also acquired suburban properties in South Norwalk, Conn., and the well-to-do Boston suburb of Wellesley. Madison Marquette will be the operating partner for properties in the Northeast, while Terranova Corp., a partner in the Florida acquisitions, will manage the southern properties.

Grosvenor expanded its presence in D.C. "It would be impossible to replicate such a unique collection of properties in today's urban retail market," says Grosvenor Senior Vice President Andrew Galbraith.

Grosvenor has concentrated on urban properties in Chicago, Los Angeles, San Francisco and D.C. The recent purchase allows the company to increase its retail space in the nation's capital by a third. "All these properties are in large urban nodes," said Galbraith. "They all have supply constraints, large residential populations around them and are close to mass transit stations."

Showpieces for Grosvenor include 50,000 square feet of retail around the trendy Dupont Circle area. "You're going to see some of the highest volume stores in the city at some of these sites," says Miles Spencer,managing director at Eastdil Realty, which represented Starwood in the transaction.

Starwood Urban is a subsidiary of fund manager Starwood Capital that was created in 1998. Urban Investment Advisors is its main financialconsultant. It quickly amassed a portfolio of 1.2 million sq. ft., but said in May it planned to sell its portfolio.

One remaining property, a mixed-use center in Coral Gables, Fla., called 55 Miracle Mile, does not appear to have been sold yet. It has 40,000 sq. ft. of restaurant and retail space. A Starwood representative was not available for comment.

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