NEW YORK CITY-Some favorable market conditions and a clever purchase of air rights enabled American Development Group to make nearly $20 million on a 2012 purchase in nine months.
The company—in conjunction with Langsam Property Services Corp.—sold 215-219 W. 28th Street for $51 million, it announced Monday. The 116,000 square foot ground-up construction site was purchased last December for $32 million.
The buyer was HAP, an Israel-based fund. Both sides of the transaction were represented by a Massey Knakal Realty Services team, spearheaded by chairman Bob Knakal. Brian Lockner, head of investments and acquisitions for ADG, managed the transaction.
The deal represents one of the largest trades this year for a residential development site, at nearly $500 a buildable foot, according to ADG. HAP plans to develop 145 rental units, 1,800 square feet of retail space and an underground 54-car automated parking garage.
“We put work into the property and there's a dearth in the market for large development sites,” says Lockner. In addition, the area's zoning is “favorable to developers.
“Most of the North Chelsea around the building is zoned for M1-6, which is light industrial,” he explains. “But in Dec. 2011, the city created a two block district from 28th to 30th St., that allows for residential as-of-right construction.”
In addition, Lockner says, ADG purchased Western facing air rights when it bought the property, allowing it to put legal bedrooms on the building's western façade, a welcome addition to the generally allowed windows on a building's northern and southern walls.
“If there are only North/South windows, a developer has to have an interior with only North/South bedrooms, and it creates funky layouts for larger units,” he asserts. “This way, the developer can have corner units with bedrooms facing west.”
On the legal front, the seller was represented by Richard Sussman from the law offices of Rosenberg and Estis. The financial partner in the deal was Spectrum Group Management's Peter Locke. The buyer was represented by Benjamin Kurzman.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
