The NYTimes ran a full page ad yesterday congratulating NY real estate broker Mark Weiss for winning the Real Estate Board of New York’s Most Ingenious Deal of the Year Award. I was curious, so I did some research and found some information about one of Weiss’s most succesful deals.
A Chinese developer bought 287 Park Avenue South, a nine-story building built in 1893, in order to convert it to a mix of condos and retail. But a problem arose:
The 1893 landmarked building straddled two zoning districts, which left one half of the property overbuilt….trying to expand the building at 287 Park Avenue South would be like struggling in quicksand: additional FAR purchased would essentially be sucked up bringing the overbuilt part of the property into compliance.
That’s what prompted listing broker Geoffrey Newman and his Newmark Grubb Knight Frank colleague Mark Weiss to MacGyver a solution that earned the brokers a nomination for the Real Estate Board of New York’s “Ingenious Deal” award.
Here’s what they did:
By removing several floors from the interior part of the building that was overdeveloped, Newman realized, a buyer could bring the entire building into compliance, freeing the way to add bonus square footage from inclusionary housing certificates the NGKF team identified in the area.
“The idea was, that by removing 4,000 square feet we were able to add 27,000 square feet onto the building,” he told The Real Deal. “That was really the basis of what differentiated our approach to other ways of selling the building.”
The idea was indeed ingenious but you will also note that all of the ingenuity was devoted to evade the zoning and the price of evasion was high. In order to work around the zoning law, 4,000 square feet of very valuable New York real estate had to be destroyed. (Not to mention all the hours of ingenuity and legal effort that was used up devising and implementing the deal).
When thinking about why it’s so expensive to build in many American cities just remember that the deal of the year is when you build 31,000 square feet of space and only have to destroy 4,000 square feet of space to do it.