Salmar Properties trying to renege on Sunset Park manufacturing requirement

Marvin Schein's firm agreed to the deed restriction in exchange for $37M in tax breaks
May 31, 2019 05:58PM

850 Third Avenue

850 Third Avenue

Marvin Schein’s Salmar Properties says that a deed restriction it received in exchange for millions in tax breaks no longer makes financial sense.

The landlord, which agreed to set aside 85 percent of the Liberty View Industry Plaza for manufacturing tenants, sent a letter to the city’s Economic Development Corporation in an effort to renege on the deal, according to Gothamist. Schein cited a report from Goldman Sachs that found that the financial returns are not generating enough revenue for Salmar Properties to make good on its loans.

When the city sold the Sunset Park property, it included a $37 million tax break in order to make it easier for the firm to keep the space for manufacturing. Salmar paid $9 million for the 1.1 million-square-foot site at 850 Third Avenue.

Salmar, who donated $55,000 to Mayor Bill de Blasio’s reelection campaign in 2016,  later got another deal with the city to lease some of the space to retailers and was granted an additional zoning exception to rent to big-box retailers.

Salmar’s main tenant at Liberty View is currently Amazon, which signed a seven-year lease in 2015. But more than half of the building remains vacant, which may signal that Salman is waiting for a retail tenant.

Manufacturing space typically leases for between $14 and $30 per square foot while retail tenants pay three times that amount, according to the publication. [Gothamist] —Georgia Kromrei