Gary Barnett’s Extell Development is in the final stages of securing an assemblage for its next development – a site on the Upper East Side with more than 250,000 buildable square feet.
The development firm is considering building a residential tower with a school at its base on the site, located on First Avenue between East 79th and 80th streets, Barnett told The Real Deal. The site consists of a total of 10 parcels, most of which have been acquired and the few remaining plots that are just now in contract.
The parcels together offer about 200,000 buildable square feet, but sources said the developer intends to pursue an inclusionary housing bonus would bring the potential size to at least 250,000 square feet. Barnett said Extell is also weighing whether to tack on additional air rights from neighboring properties. The parcels’ collective addresses are 1514-1528 First Avenue, 401-403 East 79th Street and 400-402 East 80th Street in the Upper East Side’s Yorkville neighborhood.
A school has already approached the developer about occupying a portion of the development, though no agreement has been made, Barnett said. Barnett added he hopes to begin demolition in the next six months.
Like many assemblages, the process of stitching them together can take a while. Barnett, who has a reputation for executing complicated development deals in the city, has been working to complete the First Avenue package for more than a decade. In 2007, he paid $9.5 million for 403 East 79th Street, $4.8 million for 402 East 80th Street and $4.9 million for 1522 First Avenue, records show.
“When everything crashed in 2008 and 2009, we sold most of it,” Barnett said. “But eventually, we saw an opportunity to buy the properties back and complete the site.”
As the market tumbled, he sold the latter two buildings for a combined $7.7 million, but kept their development rights. Then, in the fall of 2017, he bought back the two buildings along with another two owned by the same seller, Sal Notaro’s Expert Management, in a series of transactions totaling $11.2 million, records show.
In many of the deals, other owners agreed to act as a shield to maintain the secrecy of the assemblage. In 2015, for example, Extell bought a pair of buildings at 1516 and 1518 First Avenue for $14.8 million from Jack Resnick & Sons, though Martin Hollander’s Marin Management served as a shield on the public filing, according to sources and records. (Cushman & Wakefield had marketed the properties with the $25 million asking price.)
The buyouts of residential and retail tenants, which are ongoing, have been extensive. The 10 soon-to-be-demolished properties contain a total of 102 apartments and nearly a dozen retailers. Vegan restaurant V-Note, Chinese takeout spot Szechuan Kitchen and the cafe Anneliese’s have since vacated.
In the most recent closed transaction, Seligman Rosenberg’s Montrose Associates sold its building at the south corner – at 401 East 79th Street, also known as 1514 First Avenue – for around $16 million, sources said. That deal, which is said to have closed a few weeks ago, has not yet appeared in records.
The final batch of as-yet-unclosed acquisitions include 1520 First Avenue, owned by the Odierno family, and 1528 First Avenue (also known as 400 East 80th Street), owned by the Gailas family’s Jim-Jay Real Estate, according to records.
Construction is underway at another Extell development on the Upper East Side – the Kent, a 30-story condo at East 95th Street and Third Avenue. The New York City School Construction Authority signed a ground-floor lease there last month, with plans to open a pre-kindergarten.
Extell has several projects under construction such as One Manhattan Square and Central Park Tower and a few in the pipeline such as an Upper West Side tower at 50 West 66th Street. He’s also under the gun to sell $500 million worth of condo units at the $4 billion Central Park Tower project by January 2021, and has faced a backlash from Tel Aviv shareholders who are upset that he took a $75 million dividend. The firm recently put a development site at West 54th Street and Broadway on the market for about $200 million, the Commercial Observer reported.
Elsewhere on the Upper East Side, Naftali Group is looking to acquire an assemblage at East 83rd Street and Third Avenue for a condo tower and HFZ Capital Group has started picking up parcels at East 79th Street and Lexington Avenue.