Larry Gluck’s Stellar Management has finalized a plan to partner with tenant
Erez Shternlicht and replace a loading dock in Gluck’s Meatpacking District office
building at 450 West 15th Street with a prime retail storefront.
The retail addition, that will sit just west of luxury clothing retailer Jeffrey New
York on West 14th Street between Ninth and 10th avenues, is part of a larger
approximately $60 million sale and lease transaction Milk Studio’s Shternlicht
executed in two separate deals including the sale of the neighboring Mobil gas
Shternlicht said the extremely complicated deals would unlock millions of dollars
in value for the Stellar Management building and influence the area by adding
retail on 14th Street all the way to 10th Avenue.
“This is going to complete the street here. This will have a huge impact on the
neighborhood,” Shternlicht said
Ryan Jackson of Downtown-based commercial and residential landlord Stellar
Management said in a statement to The Real Deal: “We are pleased to be able
to provide additional retail space in a contiguous streetscape that will benefit
existing tenants and the neighborhood.”
The Meatpacking District, which saw maximum rents decline from the peak in
2007 and 2008, remains one of the strongest shopping districts in the city. CBRE
Group shows average asking rents on 14th Street from Eighth Avenue to the
West Side Highway to be $379 per foot in the third quarter, up 16 percent from
the second quarter average of $325 per foot.
Shternlicht’s deal was at least three years in the making, with portions of it
reported in 2008 and again this week in the Wall Street
Journal. But the retail reconfiguration has not been previously revealed.
In the first transaction, Shternlicht signed a contract to sell the Mobil gas station
site at 461 West 14th Street at 10th Avenue to Michael Miller’s Real Estate
Equities for $48 million, Shternlicht said. But the sale does not take place right
away. In place now is a 48-year ground lease, which gives Miller the right (and it
is expected he will exercise it because it is financially advantageous to buy the
property, a source said) to buy the parcel within seven years, property records
published yesterday show.
Real Estate Equities did not immediately respond to a request for comment.
In the second, separate yet related deal, Shternlicht carved about 3,500 square
feet out of the Mobil parcel on the 15th Street side of that plot which is mostly
covered by the High Line. That piece of the gas station site will be used to
provide access to a new loading dock to 450 West 15th Street on the north side
of the building. That will replace the loading dock that now occupies 75 linear feet
of 14th Street retail frontage on the south side of Gluck’s building.
That portion of the deal is ultimately expected to net Shternlicht about $12
million, he said.
But both deals, which were finalized Nov. 28, are more complicated than they
appear. In the first one, Michael Miller’s Real Estate Equities made a $13 million
payment toward the $48 million purchase, and at the same time, he is paying
a substantial rent to Shternlicht, which will be in place until he closes on the
In the second deal, Gluck is not acquiring the land from Shternlicht in a
straightforward purchase. Instead, Shternlicht will transfer the 3,500 square feet
to Stellar Management’s 450 West 15th Street. Stellar and Shternlicht will share
the costs to redevelop the new retail and new loading dock space, and after
expenses are covered, the two will split the projected annual revenue of $2.4
million, with 60 percent going to Gluck and 40 percent to Shternlicht, a source
close to the deal said.
Douglas Harmon, senior managing director of investment firm Eastdil Secured,
was an advisor on the transaction.
While city property records published yesterday show a memorandum of lease
recorded with a value of $26.27 million, Shternlicht said that did not properly
reflect the transaction.
Shternlicht is familiar with 450 West 15th Street, where his offices are. He was
part of a group that sold the building in 2007 to Gluck’s Stellar Management for