Who will walk away with the Flatiron Building?

Landmarked property returns to auction block Tuesday after March fiasco

From left: Jacob Garlick and Jeffrey Gural depicted with the Flatiron Building (Getty)

From left: Jacob Garlick and Jeffrey Gural depicted with the Flatiron Building (Getty)

Want to buy the Flatiron Building? Tomorrow may be your last chance.   

The iconic property is headed back up for auction Tuesday at 2:30 p.m. on the steps of New York County courthouse in Lower Manhattan. A previous attempt to auction off the landmarked yet entirely vacant office building was thrown into disarray when winning bidder Jacob Garlick failed to put down a required deposit

A court-appointed referee, apparently unmoved by Garlick’s attempts to show that he had the money to close the deal, rescheduled the auction after the deposit deadline passed. 

New guardrails have been implemented this time around in an apparent attempt to deter unwanted interlopers. Whether they’ll work remains to be seen. Here’s where things stand:

The contenders

The second-place bidder at that initial March auction, a group led by GFP Real Estate’s Jeffrey Gural that represents the building’s majority ownership, is now suing Garlick and his investment firm, Abraham Trust, claiming that Garlick’s winning $190 million bid was fraudulent and that he never even had the money for the $19 million deposit.

Despite all the attention Garlick brought to the property, it does not appear to have many additional suitors.

Apart from Gural’s group, only one other bidder has submitted paperwork to participate, according to the auctioneer Matthew Mannion of Mannion Auctions. Others can still show up Tuesday and fill out the required paperwork to join the bidding, Mannion said.

No minimum bid has been set yet, but it will likely be around $50 million, the same as at the first auction. 

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This time around, however, the winning bidder will be required to pay $100,000 at the conclusion of the auction by certified check, something that was not required at the first auction. Bidders will also have to show proof of funds prior to the auction.

One insider said he’s heard that Garlick plans to attend the auction. It’s unlikely, however, that the court-appointed referee would allow Garlick to bid, especially given the active litigation against him. 

Garlick did not return a request to comment.

How we got here

The building was put up for auction because of a dispute between the majority owners — a group including Gural’s GFP Real Estate, Sorgente Group, Newmark and ABS Partners — and Nathan Silverstein, who owns the remaining 25 percent. 

Unable to see eye-to-eye on the building’s future, the owners agreed to pursue a partition auction, which allows the owners to make a bid using their existing ownership stake in the property — making Gural’s group the clear frontrunner. 

Silverstein previously told The Real Deal that he is a distant relative of Garlick, but the two have only met once. TRD could not find any evidence that there was collusion between Garlick and Silverstein over the bidding process, although Gural’s lawsuit alleges the pair had been in contact the day before the March auction.

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After Garlick flopped on his bid, the Gural group declined an option to acquire the building at its highest bid price of $189.5 million, sending the property back to auction. The vacant building is expected to go for much less than that at Tuesday’s auction because of required renovations, which the Gural group claims will cost up to $100 million.