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RED BANK: BUILDING VALUE DOUBLES. HOW?

red-bank-14-broad-080322-500x375-2422456The building at 14-16 Broad Street doubled in value in just two years. (Photo by John T. Ward. Click to enlarge.)

By JOHN T. WARD

whatsgoingonhere-220x39-9915471Talk about rapid inflation: a downtown Red Bank commercial building doubled in value over the last two years, according to a recent sale.

What’s Going On Here?

The building, at 14-16 Broad Street, with the Bistro at Red Bank restaurant as the sole ground-floor tenant and two floors of office space, sold last month for $2.781 million, according to a deed filed with Monmouth County.

That’s more than twice the $1.3 million seller VIPP 14-16 Broad LLC paid to acquire the 8,600-square-foot building in June, 2019, records show.

Igor Kapelnikov of Manalapan, principal in VIPP and a commercial real estate broker, told redbankgreen the increase was the result of upgrades he made to the building.

When he bought it, the second floor “had an under-market rent, and the space was not in good condition,” and the third floor was vacant, Kapelnikov said. He renovated the second floor for a new tenant, and leased the third to another, he said.

“With those two tenants in place and some other capital improvements, the numbers spoke for themselves, and that is how I was able to buy for $1.3 million and sell for $2.7 million,” he said.

The building was the subject of an online auction in July, with a starting bid of $800,000, according to a listing by Ten-X Brokers, and attracted “multiple bids,” Kapelnikov said.

Records identify the buyer as AFP Seventy Five Corp. of Great Neck, New York.

The price jump is indicative of “very strong demand from investors” for tenanted buildings in downtown Red Bank, said Geoff Brothers, of Brothers Commercial Brokerage, who has leased space in the building but was not involved in the sale.

“There’s quite a few people looking to invest,” Brothers said. “The market right now is being driven by investors, more so than users.”

Brothers also cited the 2021 purchase by restaurateur Tim McLoone of the building at 26 Broad, where his Robinson Ale House had been a tenant for seven years, as a possible magnet for investors.

“Wherever Tim goes, people like to be associated with him,” he said. “He’s a pretty smart guy, and they figure if it’s good enough for Tim, it’s good enough for them.”

The auction notice for Kapelnikov’s building said Bistro is “currently paying significantly below market rent.” George Lyristis, a principal in the restaurant, declined comment.

The building’s current assessment is $1.64 million, generating $34,478 in annual property taxes, according to borough records.

The assessment actually dropped in 2019, from $1.75 million, to $1.54 million in 2020. The decline was the result of successful tax appeal, according to borough tax collector Ashlesha Deshpande.

See more entries in redbankgreen‘s What’s Going On Here? series here.

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