A troubled Midtown office property is on the market after a court ruling bumped Charles Cohen from ownership.
The curved tower, located along Billionaires’ Row at 135 East 57th Street and Lexington Avenue, is for sale after a legal order against the billionaire head of Cohen Brothers Realty.
The move comes after the Wallace family, who own the land beneath the building, spent over a year battling Cohen in New York State Supreme Court. Landlord William Wallace last year sued to evict the billionaire, who responded by blaming office vacancies and low demand before turning to what he called Wallace’s “unreasonable refusal” of a plan to convert the office and retail property into a residential condominium.
Cohen defaulted on the lease in early 2023, and over the past two years, skipped paying the city property taxes to the tune of over $8 million. Court documents show he also neglected some repairs, leading retail tenant Saks Off Fifth to begin another court action and stop paying rent this year.
A judge signed an order on Sept. 6 backdating Cohen’s eviction to his initial default on June 26, but some tenants may have even paid him their July rents.
The Wallace family is now open to either a new reconstituted ground lease or even a full sale, with all options on the table, according to people familiar with the situation.
Legal sources told The Real Deal that with the canceling of the ground lease, current office and retail tenants who signed leases with Cohen and don’t have non-disturbance agreements will have to look to the ground owners or the building’s new operator/owner to honor the deals or cut new ones.
Offers are now being submitted to JLL’s Andrew Scandalios, who declined to comment on the marketing efforts.
Designed by Kohn, Pederson Fox, with an alternative address of 700 Lexington Avenue, the building was developed by Madison Realty Associates on land owned by the Wallace family that was leased in 1972 through 2103.
After Cohen acquired the ground lease in 1997, he dubbed the 1988-era tower with 425,000 square feet, “Tower 57.”
He refinanced it in 2022 with $100 million from Fortress.
Tower 57 rises from its south- and east-facing curved base to 32 stories, leaving an open corner with a pedestrian plaza and circular, temple-like fountain and structure.
The property has a parking garage, loading dock, ground-floor retail, a messenger center and floor-to-ceiling windows.
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