Extell looking to sell Hudson Yards rental tower for $775M

555 10th Avenue was one of the first buildings to rise following the neighborhood’s rezoning

TRD New York /
Oct.October 03, 2018 01:15 PM

Gary Barnett and 555 10th Avenue (Credit: Alistair Gardiner for The Real Deal)

With the city’s multifamily market showing new signs of life, Gary Barnett is looking to sell his recently completed luxury rental tower in Hudson Yards.

Barnett’s Extell Development put the 600-unit building at 555 10th Avenue on the market with an asking price of $775 million, sources told The Real Deal. A team at Newmark Knight Frank led by Jimmy Kuhn is marketing the property.

Barnett could not be immediately reached and Kuhn declined to comment.

Completed in 2016, the 56-story 555 10th was of the first in a wave of new rental towers to sprout up on the Far West Side between 34th and 42nd streets as a result of the City Council’s 2005 rezoning of the Hudson Yards area.

In fact, the building sits across the street from the site of a subway station the city had planned to build when it extended the 7 Train subway from Times Square to 34th Street. Officials pulled the plug on the station, which would have cost $500 million, for budgetary reasons in 2007. But the city still retains easements that give it the right to construct a new station at 41st Street.

(Former deputy mayor Dan Doctoroff, architect of the Hudson Yards plan, publicly pushed to resuscitate the plan for a new subway stop last year, though it doesn’t appear the city has any intention of moving ahead.)

Barnett developed his building with the city’s 80/20 and Affordable New York programs, and set aside 120 of the units as affordable housing.

The tower has 476,000 square feet of rentable residential space and 6,000 square feet of retail. Amenities include two pools (one on the roof and an indoor saltwater pool), a bowling alley, arcade, on-site pet care and an outdoor dog park.

Extell controls the property under a 99-year ground lease the company signed in 2011 at a cost of $28.57 million with Solil Management, the company that manages the estate of Sol Goldman.

In 2016, Extell struck a financing deal with Scott Rechler’s RXR Realty, which provided a $463.2 million mezzanine loan to finish construction at 555 10th avenue and two other buildings (250 South Street and 500 East 14th Street). The deal reportedly gave RXR a preferred equity stake in the projects and entitled the investor to 50 percent of their cash flow after the loan is paid.

Extell sold a roughly 94,000-square-foot commercial condominium at the building to Success Charter School in 2016 for $67.7 million.

Meanwhile, the Far West is seeing a number of multifamily buildings rise, such as Imperial Companies’ 225-unit Henry Hall building at 515 West 38th Street and Lalezarian Properties’ 250-unit 515 West 36th Street. Last month, Rockrose Development filed plans for a 600-unit residential tower at 551 West 38th Street.

And all that new product is forcing landlords to offer increasing concessions. But despite a soft rental market, multifamily investors have been pulling out their checkbooks recently. Sales volume in the city’s multifamily sector was $5.34 billion in the first half of the year, up 64 percent from $3.25 billion a year earlier, according to Ariel Property Advisors.

The Jack Parker Corporation is one of the sellers taking advantage of interest from investors. As part of a move to divest its real estate holdings, the company hired a Newmark team of Kuhn and fellow brokers Michael Byrne and David Colen to market its three-property, 2,082-unit multifamily portfolio, which has already attracted buyers. Slate Property Group and GreenOak Real Estate are nearing a deal for the company’s Biltmore rental tower in Midtown for more than $250 million. Blackstone Group is buying the Parker Tower complex in Forest Hills for $500 million, and Related is purchasing the company’s 291-unit Truffles Tribeca for $250 million.

Other recent megadeals include the $905 million sale of Starrett City to Brooksville Company and Rockpoint Group in May, and this summer the Dermot Company and Dutch pension fund PGGM agreed to buy 101 West End Avenue for more than $400 million. Cushman & Wakefield’s Doug Harmon and Adam Spies brokered those two deals.

Elsewhere, Extell is currently working on the $4 billion Central Park Tower condo at 217 West 57th Street, where 20 of the 179 condos will be priced at $60 million or above. The building’s priciest unit will ask $95 million.


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