Savanna has closed on a deal that will see the firm pay $24.7 million to acquire and redevelop a West Chelsea art gallery site owned by the Silvermintz family, The Real Deal has learned. But construction on the project will likely be delayed by an ongoing legal battle with an existing tenant.
The venture calls for demolition of the existing site at 540 West 26th Street and construction of a 160,000-square-foot complex, anchored by a nine-story building designed by Morris Adjmi Architects. The property will include a range of office tenants, galleries and community space, according to the companies. Plans released last month indicated the site will include 29,000 square feet of gallery space and 99,000 square feet of office space.
Jamison Weiner of the Manhattes Group will be the exclusive leasing agent for the property.
Michael Silvermintz, managing partner of the Silvermintz real estate family, said in a March 2013 announcement that his firm has been working with Weiner for 15 years to prepare the current art gallery site for future development.
Despite the closing of the deal last month, plans for converting the property are being held up by L&M Galllery, an art space located at the existing two-story site. The firm filed a $10 million breach of contract suit against Silvermintz’s firm, an entity called 293 Tenth Avenue.
The suit, filed Aug. 26 in Manhattan Supreme Court, alleges that the landlord failed to provide a valid noticed of demolition from the Department of Buildings and took other steps to interfere with the operation of the gallery, which has a lease set to expire in 2016.
Lawyers for Silvermintz denied the allegations, claiming that they gave adequate notice to the gallery and said the DOB demolition notice cannot be provided unless the tenant has vacated the premises. They also claim that Silvermintz sold the venture to new owners – Savanna — and has no control over the property any longer, in court filings.
“The court didn’t consider that a fatal defect in their motion and would allow the appropriate substitution,” attorney Jay Solomon, who represents 293 Tenth Avenue Corp., the defendant in the suit, told The Real Deal.
Analysts said the price paid for the site equates to $190 a square foot, which is less than half the price paid for other acquisitions and development sites in the High Line area.
Savanna declined to comment. Lawyers for L&M were not immediately available for comment.