Chetrit Group pays $32M for Penn Plaza development site

City approves plans to demolish two low-rise commercial buildings

From left: 245-247 West 34th Street (Photo: Google), Richard Cohen and Joseph Chetrit
From left: 245-247 West 34th Street (Photo: Google), Richard Cohen and Joseph Chetrit

The Chetrit Group snapped up two adjacent properties across the street from Madison Square Garden in the heart of the Penn Plaza commercial district in January for $31.5 million and today won approval from the city to demolish them.

The Chetrit Group, headed by brothers Joseph and Meyer Chetrit, in partnership with Brooklyn-based Cornell Realty Management, bought the adjacent buildings 245 and 247 West 34th Street from the Cohen family of the Brooklyn-based retailer Conway Stores, on Jan. 9, city records show. On the same day, the larger Conway store chain was sold to National Stores, Women’s Wear Daily reported.

Chetrit paid $15.7 million for each of the properties, which are located between Seventh and Eighth avenues, city records show. At the same time, the development firm borrowed $22 million from an affiliate of Midtown-based financial firm Fortress Investment Group.

The area is a major shopping destination for price-conscious New Yorkers, brokers said, which is helping to drive up asking rents. From the spring of 2012 to the spring of 2013, retail asking rents on 34th Street rose 30 percent to $724 per square foot on the ground floor, from $558 per foot, figures from the Real Estate Board of New York show.

“I think it has just turned into probably the most concentrated shopping strip in the city in terms of value-oriented shoppers,” Peter Braus, a managing partner at commercial firm Lee & Associates NYC said. He was not involved with the transaction.

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“Even though the rents have gotten pretty astronomical there over the past couple years, the area has the numbers — the sales numbers — to back up the high rents,” Braus said.

Conway’s tenant Transworld in September inked leases with Conway covering each building, but surrendered those leases on Jan. 9 back to Conway, which agreed to terminate the leases early, city records show.

The Chetrit Group filed demolition plans with the city’s Department of Buildings to tear down the one- and three-story structures. The plans were approved today, the agency’s online records show. A 25,080-square-foot building can be constructed at the site, data from PropertyShark shows.

Richard Cohen, speaking for the Cohen family, declined to comment. The Chetrit Group, Cornell and Fortress did not immediately respond to a request for comment.

Fortress is tied to another Chetrit property in the neighborhood.  In 2011, the lender took title to 541-545 West 37th Street and 540-544 West 38th Street in the Hudson Yards neighborhood, after foreclosing on developer Baruch Singer. Then in September 2012, Fortress sold the site to the Chetrit Group for $26.5 million.

Last week, the Chetrit Group filed plans to demolish four buildings that make up that site, where it has rights to build a large tower with up to 373,275 square feet, depending on how it taps into development incentives.