Toll Brothers pays $56M for Hudson Square site, but plans hinge on rezoning

Toll Brothers has picked up a two-story West Soho parking garage, primed for redevelopment as a residential building, for $56.5 million, marking the second of two prospective condominium sites the national homebuilder picked up at the end of the year, sources told The Real Deal.

The block-through lot at 78-86 King Street currently has a 40,000-square-foot structure on the site and another 160,000 square feet of air rights.

The transaction, an off-market deal, was structured by HPNY’s Ivan Hakimian and Kevin Esh. “The sellers of the King Street property were long-term family owners who capitalized on the year-end frenzy going on in Manhattan to avoid paying higher capital gains taxes in the future,” Hakimian said.

David Von Spreckelsen, a senior vice president at Toll, said the company’s plans for the project depend on the Hudson Square rezoning proposal currently making its way through the Department of City Planning.

Major landlord Trinity Real Estate, which hopes to erect new residential towers in the area, submitted the proposal in August 2012. It has gained support from Manhattan Borough President Scott Stringer, as well as downtown developers. The rezoning would allow more extensive development of residential property in the neighborhood.

“We don’t have anything we can talk about specifically until we see what the rezoning is at the end of the day, but we anticipate doing a condo there,” Von Spreckelsen told The Real Deal. “It’s a great opportunity to build something of pretty big scale in a neighborhood we think is — and will become — an even greater residential neighborhood.”

The seller, listed in public records as the Packer family, had been approached by various firms hoping to strike a deal for the site before Toll prevailed, Von Spreckelsen said.

He also confirmed that Toll may seek opportunities to build residential projects in New York City in the coming months, and added that the company is assessing the viability of several prospective rental sites here.

“As the rental market has gotten stronger, [Toll Commercial] is looking more aggressively to do new construction rental projects in certain markets,” he said. “The Atlantic Corridor from D.C. to Boston is an area where the group is looking intensely. I anticipate that sometime soon we’ll be embarking on a rental project in New York City.”

He declined to comment further on the specifics of those sites. Toll also purchased a troubled development site at 953-961 First Avenue from developer Alexico Group on Dec. 27, on which it plans to build condos, as The Real Deal reported.