The investment firm that bought a portfolio of Lenox Hill properties three years ago that had been amassed by a late plumber baron is looking to sell off a parking lot at the foot of the Queensboro Bridge for $14.6 million. But what the development site lacks in charm, it makes up for with the potential to generate bonus air rights that could be worth tens of millions of dollars.
The parking lot at 321 East 60th Street is one of eight properties Midtown-based Minuit Partners purchased for $19.6 million in 2011 from the estate of Arthur Brown, co-founder of a Manhattan company named Holby Valve who died in 2007.
In the interim, Minuit acquired a variance for the site, which sits in a commercial district, allowing for the development of a 28-unit residential building.
The site’s real appeal, said Eastern Consolidated broker David Schechtman, is that should a developer opt in to the city’s Inclusionary Housing Program, the site will generate 80,000 square feet of bonus air rights that can be used on the Upper East Side.
“At first blush it seems like just a surface parking lot that’s partially obscured by the exit ramp to the bridge,” said Schechtman, who is marketing the property with Lipa Lieberman.
The city’s Inclusionary Housing Program, which trades extra development rights for the construction of affordable housing, allows owners to either use or sell their air rights within the community board.
“They’re particularly valuable because of the mayor’s obvious commitment to affordable housing,” Schechtman said. “The program is not going away.”
James Nelson, an investment broker at Massey Knakal, said he currently has a handful of air rights packages he’s marketing across the city, and on the Upper East Side they’re trading for anywhere from $400 to $600 per foot.
One of the difficulties with generating bonus rights for a market-rate project is finding a site within the community board that works economically as affordable housing. But when a developer can find a suitable site, it’s usually an afterthought on the way to bigger profits.
“We’re not building it for the economics of that project,” Kas Sanandaji, founder and president Apex Real Estate Investments, told The Real Deal last week about his bonus-generating affordable-housing project in Gramercy.