From the August 2014 issue: In 2010, developer Sharif El-Gamal sparked a national firestorm when he announced plans to build Park51, a 15-story Islamic cultural center at 51 Park Place. His critics famously (or infamously) dubbed the project the “Ground Zero mosque” because of its close proximity to the site of the September 11 attacks, and El-Gamal became a bulls-eye for anti-Muslim backlash.
“It was an eye-opener,” El-Gamal told The Real Deal last month at his Midtown South office. “It was deeply disturbing that we have such a bad PR issue as Muslims. I feel grateful to God that he allowed me to be a custodian of that baton for a period of time, but I also feel that it’s important for us to reflect on the principles of this country — among them religious freedoms and freedom of speech.”
Now, four years later, the furor has died down and El-Gamal’s plans for the site have quietly changed. While he is still building an Islamic cultural center, it is a significantly scaled down three-story version. The centerpiece of his project is instead an adjacent 39-story, 48-unit residential condo tower, as TRD and others have reported.
“There’s a new Downtown that is coming to New York,” said El-Gamal of the yet-unnamed condo, which is located at 45 Park Place. He is asking $3,000 a square foot at the development — 13 percent pricier than average new-development listings in Manhattan.
During an exclusive interview, El-Gamal, the founder of Soho Properties, predicted that his new tower will be a “market-maker for the neighborhood” in terms of design and clientele, and he explained his rationale for changing directions on the project. But sources say he has several significant hurdles to overcome first.
Assembling the site
El-Gamal has locked up a stretch of Park Place between West Broadway and Church Street in the last few years, gaining control of three adjacent sites there since 2009.
In July 2009, in the wake of the financial crisis, he paid $4.85 million, or the bargain-basement price of $100 per square foot, for the 45-47 Park Place site, according to city property records. That was four times less than the $18 million the seller, the Pomerantz family, was offered during the market’s height in 2007, according to news reports.
As part of the deal, El-Gamal also paid the sellers $700,000 to take control of a ground lease with Consolidated Edison for the site next door at 49-51 Park Place, and late last month, he paid the utilities company $10.7 million to buy the fee interest, giving him full control of that site.
And in December 2012, he shelled out another $8 million for 43 Park Place, a five-story mixed-use commercial building that he has yet to announce plans for.
The planned condo building at 45 Park Place, which is being designed by Michel Abboud of SOMA Architects along with Ismael Leyva Architects, is slated to be about 118,000 square feet. But El-Gamal said that he will “actually have a little bit more,” because he owns additional air rights.
From left: Elizabeth Stribling and Sharif El-Gamal (Credit: Williams New York)
He also told TRD exclusively that Stribling & Associates will be marketing the building. Stribling’s Sean Murphy Turner and Mary Ellen Cashman will lead sales at the project. “It was very humbling to get Elizabeth herself” to come and pitch the project, El-Gamal said of the brokerage’s doyenne Elizabeth Stribling.
To land Stribling, one of the city’s most established residential brokerages, represents a serious turnaround from 2010, when high-profile politicians — including former New York City Mayor Rudolph Giuliani and former House of Representatives Speaker Newt Gingrich, both Republicans — were vocally criticizing Park51.
For her part, Stribling told TRD that 45 Park Place would “enhance Stribling’s prestige enormously.” She called the area a “dynamic Shanghai” because it’s seeing rapid, high-end development and has strong transit infrastructure and a vibrant retail scene.
Bankrolling El-Gamal
El-Gamal said he expects to begin construction, as well as sales, at 45 Park Place early next year. But before a shovel goes into the ground, he needs to line up financing.
He declined to discuss how much the project would cost or where his financing would come from, but using typical Manhattan development costs of $500 to $600 per square foot for hard construction costs and $150 per foot for soft costs, TRD estimated the project will cost at least $75 million.
El-Gamal has made several building trades in his career, including the sale of 31 West 27th Street for $65 million in 2012. But sources told TRD that given his relative inexperience in residential development — his only previous ground-up condo project is a six-unit building at 50 Lispenard Street in Tribeca — the money might be hard to come by.
“He’s a bit of an unknown as a residential developer,” said Andrew Gerringer of new development marketing firm the Marketing Directors, which is handling sales at Time Equities’ Competing 50 West Street. Banks might see El-Gamal as an uncertain bet, Gerringer said, based on a “lack of experience on projects of this magnitude.
“He’s either going to have to bring in a JV [joint venture] partner or put in a tremendous amount of equity himself,” Gerringer said.
In addition, El-Gamal’s financial track record is far from pristine. In 2011, Con Ed sued him for allegedly owing $1.7 million in back rent at 51 Park Place. That suit is now settled.
On the commercial side, Soho Properties is teaming up with MHP Real Estate Services (formerly Murray Hill Properties), Hampshire Hotels and Flintlock Construction Services on a $300 million Dream Hotel and 20,000-square-foot retail space at 560 Seventh Avenue in Times Square. The partners paid $61.5 million for the site in February. The deal was financed through about $32 million in equity contributed by the partners and a $63 million loan, which was procured by MHP, the company’s chief operating officer David Sturner told TRD.
Soho Properties owns “the lion’s share” of the project, while the other partners have roughly equal stakes, Sturner said, adding that even though El-Gamal doesn’t have a long development pedigree, he is a “very experienced real estate guy and a quick learner.”
Condo competition
The biggest issue for selling out El-Gamal’s condo, brokers said, is no longer the stigma attached to the 2010 controversy. Instead, it’s the new condo competition in the neighborhood, which includes projects such as Silverstein Properties’ 30 Park Place, Alchemy Properties’ Woolworth Building condo conversion at 233 Broadway, Fisher Brothers and Witkoff Group’s 101 Murray Street, and 50 West Street.
El-Gamal and Stribling declined to reveal pricing for 45 Park Place and paperwork has not yet been filed with the Attorney General’s office. But some brokers said given that the project will only have 48 units, pricing will have to be aggressive.
“When you’re that size, you have to hit certain price points — high $2,000s per square foot, if not $3,000,” said Jarrod Randolph, who recently started his own firm JGR Property Group. That would price the apartments between $7 million and $9 million, a range in which buyers have several buildings to choose from.
Two-and-three-bedroom units at 30 Park Place have been asking between $2,950 and $3,079 per square foot, according to internal sales information TRD obtained last month. Units at 50 West, meanwhile, are selling for about $2,500 per square foot, Gerringer said.
Regarding pricing, El-Gamal would only say “we’re going to go with what the market has been known to demand and absorb.” He declined to comment on the building’s design and amenities, but said its main competitor would be 30 Park Place, “because our timing is almost identical.”
Stribling, meanwhile, said she viewed the competition as a good thing, and pointed to her experience selling out the residences at The Iconic Plaza, which at the time was competing with 15 Central Park West.
She said 30 Park Place would add to the allure of 45 Park Place. “One [project] gives validity to the other,” she said.
But whether 45 Park Place can compete with 30 Park Place, which is being designed by starchitect Robert A.M. Stern, is yet to be seen.
Randolph, for one, questioned El-Gamal’s decision to go with Abboud for his project. “I don’t think it is as sexy a name as they could have used to attract the crowd there,” said Randolph, who doesn’t represent any of the nearby condo projects.
But El-Gamal called Abboud a “legend in the making” and said the building would “solidify his name in the marketplace.”
“Our city is far behind the rest of the world,” El-Gamal said. “We still have this mentality of building a rectangle, a cube, a square. It was important for me to provide spaces that are not these cookie-cutters typically brought to market. Michel has this gift of being able to understand what a visionary buyer is looking for.”
Park51, reborn
Meanwhile, the 51 Park Place part of The Project Will Include An Islamic Museum And Prayer Space As Well As A Green Space And A Plaza.
It will be designed by Pritzker Prize–winning French architect Jean Nouvel. Representatives for Nouvel — who is designing the planned Louvre museum branch in Abu Dhabi and the National Museum of Qatar — declined to comment.
Hank Sheinkopf, a veteran Democratic consultant who is acting as a spokesperson for 51 Park Place, said in April that El-Gamal would self-finance the museum for now, but hoped to find other contributors going forward.
Back in 2010, El-Gamal struggled to raise the $140 million planned for the more ambitious version of the museum. He aimed to raise $70 million of that through tax-exempt bonds, available to religiously affiliated nonprofits, the New York Times reported at the time. He even applied for about $5 million in 9/11 recovery grants, a move that didn’t sit well with the project’s critics. Yet neither of those plans panned out.
El-Gamal admitted that Park51’s numbers did not originally pencil out, but was adamant that the scaled-down version was not a compromise of his vision. “The original plan did not work,” he said. “However, I never backpedaled or shifted from what the dream has always been. I did not want to subject my children to [other] … kids saying ‘that’s the child of the man who backed down.’ This [plan] is going to show the excellence of Muslims and the Islamic culture.”
The new plan, of course, allows him to reap the benefits of the area’s booming condo market.
Still, Gerringer said that even the scaled-down Islamic center project could act as a deterrent to condo buyers.
“At very high price points, people always consider exit strategies,” he said. “I think there could be potential for buyers to be uncomfortable with a prayer space next door.”
But El-Gamal dismissed those concerns. Any stigma surrounding the project, he said, is now “something of the past.”