Big-ticket residential conversion projects test developers’ mettle

TRD New York /
Mar.March 29, 2013 09:30 AM

Given the shortage of new residential development sites in Manhattan, major real estate players such as Gary Barnett’s Extell Development have had to master the intricate art of conversion projects, which come with more than their share of challenges, the New York Times reported.

Barnett, currently Manhattan’s most prolific developer, likes to carefully run the numbers before taking a gamble with a conversion project such as the Helmsley Carlton House, he told the Times. 

Barnett paid $164 million for the site, located on Madison Avenue at 61st Street, in 2010, and is in the process of converting the hotel into luxury condominiums. Extell and its hedge fun partner Angelo Gordon & Company are shrinking the ground-floor retail space and adding two floors on the roof to create a duplex penthouse, which was recently listed for $65 million. The developers will also restore the façade and invest in structural improvements.

“We had to be really careful stabilizing the building to do all this,” Barnett told the Times. “Thank God we are past the danger stage with all this.”

In a conversion, Barnett told the Times, every decision carries more pressure. He was investing over $350 million in the project, and said “it is actually more expensive than if we tore the damn building down and built it again. It is just so complex.”

Other big players who have invested in conversion projects in response to the lack of viable new development sites have also faced challenges. Harry Macklowe, for example, is converting two prewar buildings, 150 East 72nd Street and 737 Park Avenue, into white-glove condos, but has faced resistance from the community as well as legal headaches considerable headache and legal battles. [NYT]  –Hiten Samtani

Related Articles

One Manhattan Square Extell Development CEO Gary Barnett (Credit: Curbed NY)

Extell lands $690M refinancing package for One Manhattan Square

Extell Development's Gary Barnett (Credit: Getty Images and iStock)

Chelsea residents paid Gary Barnett $11M to protect their views from a planned tower

Central Park Tower

Extell just went public with Central Park Tower listings

Brooklyn Point at 138 Willoughby Street and Extell Development’s Gary Barnett (Credit: Alistair Gardiner for The Real Deal)

And you get an incentive! Extell offers to pay carrying costs at Brooklyn’s tallest tower

Raizy Haas and Gary Barnett (Credit: Getty Images, iStock)

One of Gary Barnett’s longtime deputies is leaving Extell

Gary Barnett and 1855 Broadway (Credit: Google Maps)

Gary Barnett assembling Columbus Circle development site

Extell Development chairman Gary Barnett and One Manhattan Square (Credit: Anuja Shakya, StreetEasy)

Rent now, buy later at Extell’s One Manhattan Square

206 West 17th Street, 116 7th Avenue, and Extell Development’s Gary Barnett (Credit: Google Maps)

What rich people in NYC will pay to keep their view: TRD analysis