How do you explain this case? Why wasn't there more competition to buy the lot and to bid up its land price? As this case below highlights, there was a recent tragedy on this property. Is this developer overly optimistic about the future demand for new NYC mansions? How risky an investment is this? Unless Wall Street collapses there must always be another hedge fund guy looking for a nice property.
The interesting piece of urban economics here is that we rarely observe the "market price" for land in a center city. Usually, the land is bundled with some structure alread on it and you buy the two of them together.
Are you going to argue that liquidity constraints (i.e that guys like me don't have $8 million to bid for the land) prohibit competition among developers? I don't know if I believe that either. Perhaps information about the land auction was not widely distributed? This would surprise me because the original owner of the land has the right incentives to "broadcast" this information nationally and even around the world.
New York Times
February 11, 2007
Big Deal
Now That the Dust Has Settled ...
By JOSH BARBABEL
JANNA BULLOCK, a Russian-born real estate developer, just spent $8.3 million to buy a prime vacant lot on East 62nd Street with just a small image problem: it is the site of the explosion that destroyed a town house last year in the ultimate real estate war. The house’s owner, Dr. Nicholas Bartha, died of injuries he received when he set off a gas explosion to prevent his wife from getting the property in divorce proceedings.
Some buyers might hire a feng shui consultant to re-energize the space or bring in exorcists to banish any demons lurking in the soil. Instead, Ms. Bullock is focusing her energies on turning the site into a force for good: the ultimate green town house, complete with a cistern to fill the pool and a geothermal heating and cooling system created by channeling 1,500 feet down into the earth.
“I don’t want to have any association with the tragedy — to me it is an empty lot,” said Ms. Bullock, who renovates Upper East Side town houses and larger mixed-use developments in Russia.
Her broker, C. B. Whyte of Stribling & Associates, put it this way: “Memories are short. Things happen every day in New York. How often can you get a brand-new house built on the Upper East Side?”
In short, while Dr. Bartha’s death and the demise of a classic town house in a landmark district were a tragedy, one person’s mistake is another’s design opportunity. While the final plans have not been set and must be approved by the Landmarks Preservation Commission, the project architect, Preston T. Phillips of Bridgehampton, N.Y., is thinking about a “much more dramatic and modernist facade,” faced with glass and pale limestone to echo details of the Links Club next door.
The plans call for a building 20 feet wide covering 8,000 square feet on 5 floors. A collection system on the roof and in the rear courtyard would channel rainwater to an underground cistern to feed a courtyard waterfall and a 12-by-36-foot swimming pool in the basement.
The East 62nd Street house near Madison Avenue is Ms. Bullock’s fifth East Side town-house project. She began renovating apartments as a hobby and said that she had now turned it into an 18-hour-a-day obsession. She bought one town house, the former home of The New York Observer, for $9.5 million in January 2005 and sold it 11 months later, after renovation, for $18.5 million. She is about to put a second 25-foot limestone town house on East 67th on the market for $35 million.
Along the way, she has mastered some marketing techniques to bring cachet to her projects. She turned over two of her properties undergoing renovation for use as charity designer showcases and has agreed to provide a third, at 14 East 82nd Street, for use as the Kips Bay Decorator Show House in April.
Dr. Bartha blew up his house last year to avoid eviction and a forced sale to provide his wife with $4 million in court-ordered payments. But it turned out the empty lot was worth far more than a vacant house. Ms. Bullock said that she expected to spend well over $5 million to put up the new house and planned to offer it for about $25 million when it was completed in about 18 months.
Two Billboards Are Rising in the Meatpacking District
THE 14-story Hotel Gansevoort towers over the meatpacking district and celebrates the district’s trendy mix of butchers, restaurants and boutiques. It has a reputation for comfort and style, a heated rooftop pool and even an outdoor rooftop fireplace. Now it is getting an unusual new addition.
According to plans filed with the city’s Building Department, the hotel’s owners are putting up a 75-foot-tall steel pillar on Gansevoort Street at the rear of the property and erecting two huge advertising signs, one 20 feet high and 60 feet wide, and the other slightly smaller, 14 by 48 feet, facing northward along Hudson Street. The smaller sign will be illuminated at night.
Billboards are usually permitted in manufacturing zones like the meatpacking district, but preservationists are complaining that the new signs will be unwelcome in an area that has outgrown its roots and has become a destination for the arts and tourism. Andrew Berman, the executive director of the Greenwich Village Society for Historic Preservation, said the signs would mar the neighborhood and turn the district into a “huge outdoor mall for advertisers, a mini-Times Square.”
“Large billboards bring in dollars hand over fist,” he said. “They market their hotel off the neighborhood, and now they are creating the visual pollution of an urban New Jersey Turnpike.”
Elon Kenchington, the chief operating officer of the Gansevoort Hotel Group, would not discuss the revenue from the billboards. But he said they were angled to minimize the impact on nearby residential buildings and would add warmth and light to what is “pretty much a dead area.” He said that the hotel had signed a long-term contract with an outdoor advertising company, which is putting up the billboards, but that the hotel would retain the right to reject ads it found unsuitable.
In a letter to the Buildings Department, Mr. Berman complained that the signs would violate a series of technical standards established for large billboards. On Wednesday, the department rejected most of his contentions but said it had asked the hotel to provide more information on several points.
In 2001, the city adopted zoning rules limiting new billboards in SoHo and NoHo in response to neighborhood complaints and tightened regulations on signs elsewhere. Much of the meatpacking district is now protected by landmark status. But the hotel site was excluded from the historic district, Mr. Berman said, apparently because the development plans were well under way.
Naomi Campbell Sells Park Avenue Apartment
WHEN she pleaded guilty last month to assaulting her maid with a cellphone, Naomi Campbell, the supermodel with a temper, issued a brief statement to the court beginning with the words, “I had an apartment at 500 Park Avenue. ...”
Now public records released last week show that Ms. Campbell had sold her expansive loftlike apartment on Park just four days before her court hearing on Jan. 16.
The apartment, where the assault took place, is on the 12th floor of the modern aluminum and glass building at 59th Street. It has 3,100 square feet of space, with 18-foot ceilings, a four-person marble whirlpool and a separate staff entrance, according to the listing by Raphael De Niro, a broker at Prudential Douglas Elliman and a son of the actor Robert De Niro.
The apartment went on sale last April at $5.5 million. But in September, Ms. Campbell dropped the asking price to $4.95 million, and in October, to $4.75 million.
According to city records, the final sale price was $4.5 million. The buyer is Walter Rogers, an American businessman based in London who had previously lived in the building.
Still, Ms. Campbell appeared to come out ahead on the real estate deal. She bought the apartment for $3.9 million in November 2004.