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Discover the landmark land assemblage at 253-261 Third Avenue, Gramercy Park, NYC. Record-setting development site, prime for a new residential tower.
Property Highlights - Development Site Cost and Details for 253-261 Third Avenue in Gramercy Park, New York City
Situated in the desirable Gramercy Park neighborhood, this unique 75,000 buildable square foot development site was created through a strategic land assemblage. Overcoming tenant challenges and complicated zoning issues, the project showcases the potential for significant development in a prime Manhattan location.
- Land Assemblage in NYC: Assemblage involves acquiring multiple smaller assets from different owners to create a buildable development site. The seller spent several years purchasing each component asset for a 75,000 buildable square foot site.
- Holdout Owner Strategy: A holdout owner in the middle of the block was induced to sell by the threat of building low-income housing projects. The owner eventually agreed to a reasonable price.
- Tenant and Zoning Challenges: The site had both commercial and rent-regulated residential tenants, along with complicated zoning issues. The marketing process assured buyers that the seller would vacate the premises and handle zoning issues.
- Resolving Tenant Issues: A pizza shop was paid $150,000 to leave early, and some residential tenants were bought out. One non-regulated tenant, identified as a prostitute, received $850,000 to vacate.
- Development Site Cost: After a comprehensive marketing process, a contract was signed for $69,600,000, contingent on the last tenant leaving. The price was $926 per buildable square foot.
- Client Testimonial: Kasra Sanandaji of Apex Investments praised Bob Knakal, Jonathan Hageman, and their team for their track record, handling tenant litigation, and overcoming zoning challenges to achieve a fantastic result.
For More Information View Our Online magazine of 183 Development Site Sales Ranged from $600,000 to $357 Million
About The Gramercy Towers Residential Development Site Location
253-256 Third Avenue is located in Gramercy Park and walking distance to Union Square to the south, and Madison Square Park to the north, offering access to green spaces, cultural events, dining, and shopping in a vibrant neighborhood setting.
The Gramercy Towers Residential Development Full Story by Bob Knakal
When it comes to land assemblage, there is nothing that can compare to New York City. Assemblage is the practice of acquiring many smaller assets owned by several different owners in order to create a buildable development site. To create the ability to do the sale of this 75,000 buildable square foot site, the seller worked tirelessly over several years to purchase each of the component assets.
There was one “holdout” owner (the term used for an owner that won't sell even if the price is well in excess of the market) in the middle of the block. To induce this holdout to sell, the owner publicly stated that they were going to build low-income housing projects on the balance of the land they acquired.
Before you knew it, the holdout seller was happy to accept a reasonable price. That left the tenants, some of whom were commercial and some of whom were rent-regulated residential tenants, as well as complicated zoning issues.
We were retained to sell the site prior to the tenants being vacated and began the marketing process telling buyers that the seller would vacate the premises and that we could work around the zoning issues.
A pizza shop with about one year to go was paid about $150,000 to leave early. A few of the residential tenants were bought out at reasonable amounts, which left one tenant, who was presumably a free market tenant, who should be able to be vacated at the expiration of their lease.
After a comprehensive marketing process, we signed a contract at an astounding price of $69,600,000, or $926 per buildable square foot – but it was contingent upon getting the last tenant out. That tenant happened to be a prostitute (verified by the seller based on Craig’s List ads) who, although a non-regulated tenant, could have made a claim that they were rent-regulated. After weeks of negotiating, the prostitute got $850,000 to leave.
Testimonial - Development Site Pricing, Record Achieved
Here is what one of the sellers had to say:
“We made the decision to retain Bob Knakal, Jonathan Hageman, and their team based on their track record for achieving record development site pricing. This transaction was fairly complex, involving tenant litigation and challenging zoning issues that necessitated a non-traditional deal structure. In turn, this could have really harmed our sale pricing. In spite of the challenges, Bob and his team did an excellent job talking purchasers through the potential issues and were instrumental in bringing about a fantastic result. Overall, we were thrilled with their team’s execution and would certainly look to use their team again.” - Kasra Sanandaji, Apex Investments, Real Estate"
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