Eichner’s Madison Square Park saga enters final act
Developer asking $20M for final unsold unit at tower after long and windy road
The saga of Ian Bruce Eichner’s Flatiron condo tower may finally be coming to a close.
A nearly 6,000-square foot duplex at 45 East 22nd Street hit the market last week at $20 million, or $3,400 per square foot. The listing for the final unsold piece of the 83-unit Madison Square Park Tower comes after eight years of legal challenges, sluggish sales and lender drama at the development.
Eichner previously lauded the project, which came as a joint venture between the Continuum Company founder and his equity partners, Fortress Investment Group and Dune Real Estate Partners, as a standout from other luxury condos on the market.
“I’ve got a tall building. I’ve got views. I’ve got five floors of amenities. I’ve got parking,” Eichner told The Real Deal during a visit to the tower’s sales center in 2015. “I’m feeling OK.”
But the developer’s path to sell out the Flatiron condo hasn’t been straightforward.
The 65-story tower was Eichner’s comeback project in New York after what he called his 15-year “exile to the desert.” After some high-profile losses in the Big Apple, he went to Las Vegas, where he developed, and then lost to foreclosure, the $3 billion Cosmopolitan casino project.
At 45 East 22nd, instead of purchasing the space outright, Eichner started by buying the air rights for a co-op in the middle of the block before approaching the owner of the neighboring building to make an offer for the first piece of land.
“I went to the guy next door, and I said, ‘We’re in America, and I’m in a position to pay you more than anyone else in America,’” Eichner told TRD in 2016.
Eichner bought $100 million worth of surrounding air rights and pieced together seven properties to take the development site from 50,000 square feet to 260,000. With $85 million from Fortess and Dune, $61 million from his own pocket and $343 million in construction loans from Goldman Sachs, Eichner kicked off construction.
Sales launched at the condo tower in January 2015 to some early success. About half of the development’s 83 units were in contract by October of that year, with the first units selling for $4.2 million and $5.9 million.
But by the following year, sales started to slow in step with a cooling luxury condo market. Corcoran Sunshine was bumped from sales in favor of the Fredrik Eklund and John Gomes team at Douglas Elliman.
When construction concluded in the summer of 2017, more than a third of the condo’s units remained unsold and Eichner went on the hunt for additional financing.
At the time, the asking prices of condos ranged from $2.7 million to $45 million, with several of the unsold units on the tower’s more expensive end.
Months dragged on with low sales. By the spring of 2018, Eichner was in danger of losing the project. His agreement with Fortress and Dune required temporary certificates of occupancy for two condo units before March 31, 2018, or else he’d have to give up control over the development’s day-to-day operations.
Tension in the JV
In a lawsuit filed in New York State Supreme Court, Eichner claimed his partners blocked his efforts to refinance by refusing to release funds necessary for construction and preventing him from purchasing one of the units.
Per the terms of their agreement, Eichner only makes money on the development once Fortress and Dune recoup their $85 million investment, plus their preferred return at an annual interest rate of 22 percent. Eichner alleged his partners wanted to cut prices and offload condos, preventing him from recovering his $61 million investment.
Fortress and Dune argued in response that Eichner missed the September 2018 milestone to sell $500 million worth of condos and only filed the complaint because he was still $110 million short, despite a six-month extension.
The partners originally granted Eichner 36 months to hit the $500 million mark. A TRD analysis around the time of the lawsuit showed luxury developers took on average about 14 months to sell $500 million in units.
The partners claimed Eichner’s plan to purchase one of the units included buyer incentives that would reduce the price to $17.5 million, and the closing wouldn’t be complete by the March 31 deadline (the developer ultimately closed in Nov. 2018 for $19.5 million.)
The judge granted Eichner a temporary injunction — preventing his partners from declaring him in default.
Eichner’s luck began to turn when in June 2018, Madison Realty Capital agreed to a $167.5 million condo inventory loan, ending the legal battles with his partners. Along with the influx of cash, sales at Madison Square Park Tower finally began to pick up again as five units entered contract in the weeks ahead of the loan deal’s closing.
Another major win came in February 2020 when a buyer — described by Eichner as a high-net-worth individual from Asia — claimed the two penthouses atop the building. The penthouse duo initially asked $77 million in 2014, before the price was lowered to $52 million and the deal eventually closed at $44 million.
At the time of the penthouse sale, Eichner said about 90 percent of the building had sold, including two units that traded for $13 million.
Though Eichner told The Wall Street Journal in 2020 that he had “no plans to do another residential condominium in New York City for the foreseeable future,” the developer has not given up on his hometown.
The developer in 2021 entered contract to buy the Community Church of NYC in Midtown for $70 million in a residential condo play. The congregation’s former Murray Hill building and four adjacent brownstone rentals are slated to give way to 150 luxury condos.