Douglas Durst and Harold Fetner closed on the purchase of a residential construction site at 855 Avenue of the Americas December 21, 2010 and are finalizing negotiations on a redesign of the project that will include at least 300,000 square feet of rental apartments, 20 percent of which would be "affordable," according to an article by Dana Rubenstein in today's edition of The Wall Street Journal.
"The site went through a number of owners ending up with a venture of Yitzchak Tessler, of Tessler Developments, and Jacob and Meyer Chetrit, of the Chetrit Group. In 2007, they purchased the land for $140 million, using $105.3 million in debt from Fremont Investment & Loan, whose real-estate business was later acquired by iStar Financial. The following year, they added a seventh parcel for an additional $12.3 million. Messrs. Chetrit and Tessler announced they would build a residential tower atop a retail base there. They cleared all but one building from the site. But their plans were upended when the real-estate market collapsed. In 2008, Messrs. Chetrit and Tessler defaulted on their iStar loan, according to court documents. Messrs. Tessler and Chetrit didn't return calls requesting comment." the article said.
"Mr. Fetner and Mr. Durst first developed an interest in the site, which encompasses the west side of Sixth Avenue, between 30th and 31st Streets," the article said, "while they were developing the [nearby Epic, their first project together. 'A lot of people thought we were nuts for building midblock, off the avenue,' Mr. Fetner said. Initially underwriting the Epic at $49 a square foot, the developers were ultimately able to achieve an average rent of $70 a square foot, making the apartment building the most lucrative in their portfolio. That means a 1,000-square-foot two-bedroom apartment would rent for more than $5,800 a month. So, in terms of being bullish on the market, we love this marketplace," Mr. Fetner said. As they were developing the Epic, the site at 855 Sixth Avenue became available. At the time, the development parcel was occupied by tenanted commercial office buildings, and the price, at about $260 a square foot, was too expensive for their taste. 'I was really disappointed and said, call me when you get a little bit more realistic,' Mr. Fetner said."
The article said that Mr. Durst and Mr. Fetner are now finalizing negotiations with Pelli Clarke Pelli Architects to design the glass facade of the 500,000-square-foot, $350-million, 40-story tower at 855 Avenue of the Americas. The previous design had been by Costas Kondylis.
The developers have not yet decided what to put in the tower's base, the article said, adding that Mr. Durst said that "Right now, we're leaning towards retail, though we are talking with hotel developers too."
Demand in the apartment residential market has been relatively strong compared with other sectors, the article maintained, adding that "effective rents, which take into account landlord concessions, grew 5.25% in 2010 after suffering a record 5.9% drop in 2009, according to market research firm Reis Inc."
The neighborhood south of Herald Square has changed dramatically since the 1995 rezoning of Sixth Avenue, which ushered in higher-density development. In 2000, the Albanese Organization completed the Vanguard Chelsea at 24th Street and Sixth Avenue, the first residential development there of note.
Now, as the Flatiron district moves west and Chelsea extends north, Sixth Avenue south of 28th street is crowded with mammoth luxury rental towers, such as the Archstone Chelsea and the Chelsea Landmark. The area between 28th Street and Herald Square is just now taking off, with the recent opening of the Beatrice, a hotel and residential development, at 30th Street and Sixth Avenue.
"The site went through a number of owners ending up with a venture of Yitzchak Tessler, of Tessler Developments, and Jacob and Meyer Chetrit, of the Chetrit Group. In 2007, they purchased the land for $140 million, using $105.3 million in debt from Fremont Investment & Loan, whose real-estate business was later acquired by iStar Financial. The following year, they added a seventh parcel for an additional $12.3 million. Messrs. Chetrit and Tessler announced they would build a residential tower atop a retail base there. They cleared all but one building from the site. But their plans were upended when the real-estate market collapsed. In 2008, Messrs. Chetrit and Tessler defaulted on their iStar loan, according to court documents. Messrs. Tessler and Chetrit didn't return calls requesting comment." the article said.
"Mr. Fetner and Mr. Durst first developed an interest in the site, which encompasses the west side of Sixth Avenue, between 30th and 31st Streets," the article said, "while they were developing the [nearby Epic, their first project together. 'A lot of people thought we were nuts for building midblock, off the avenue,' Mr. Fetner said. Initially underwriting the Epic at $49 a square foot, the developers were ultimately able to achieve an average rent of $70 a square foot, making the apartment building the most lucrative in their portfolio. That means a 1,000-square-foot two-bedroom apartment would rent for more than $5,800 a month. So, in terms of being bullish on the market, we love this marketplace," Mr. Fetner said. As they were developing the Epic, the site at 855 Sixth Avenue became available. At the time, the development parcel was occupied by tenanted commercial office buildings, and the price, at about $260 a square foot, was too expensive for their taste. 'I was really disappointed and said, call me when you get a little bit more realistic,' Mr. Fetner said."
The article said that Mr. Durst and Mr. Fetner are now finalizing negotiations with Pelli Clarke Pelli Architects to design the glass facade of the 500,000-square-foot, $350-million, 40-story tower at 855 Avenue of the Americas. The previous design had been by Costas Kondylis.
The developers have not yet decided what to put in the tower's base, the article said, adding that Mr. Durst said that "Right now, we're leaning towards retail, though we are talking with hotel developers too."
Demand in the apartment residential market has been relatively strong compared with other sectors, the article maintained, adding that "effective rents, which take into account landlord concessions, grew 5.25% in 2010 after suffering a record 5.9% drop in 2009, according to market research firm Reis Inc."
The neighborhood south of Herald Square has changed dramatically since the 1995 rezoning of Sixth Avenue, which ushered in higher-density development. In 2000, the Albanese Organization completed the Vanguard Chelsea at 24th Street and Sixth Avenue, the first residential development there of note.
Now, as the Flatiron district moves west and Chelsea extends north, Sixth Avenue south of 28th street is crowded with mammoth luxury rental towers, such as the Archstone Chelsea and the Chelsea Landmark. The area between 28th Street and Herald Square is just now taking off, with the recent opening of the Beatrice, a hotel and residential development, at 30th Street and Sixth Avenue.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
6sqft delivers the latest on real estate, architecture, and design, straight from New York City.
