Iconic Flatiron Building To Be Auctioned Off This Month
The owners of one of New York City’s most recognizable buildings might finally end a long-running dispute later this month.
The Flatiron Building, the iconic 22-story office tower that was the first Manhattan skyscraper north of 14th Street, is heading to auction on March 22, according to court documents first reported by PincusCo.
A judge approved a partition sale of the building in January, after three of the owners — GFP Real Estate, ABS Real Estate Partners and Sorgente Group, which collectively own 75% of the property — filed suit against the other partial owner, attorney Nathan Silverstein.
A New York State judge issued a ruling earlier this week setting the auction date and determining that Mannion Auctions owner Matthew Mannion will preside over the sale, The Real Deal reported. Owners can use their stake in the property, located at 175 Fifth Ave., as part of their bid. GFP, ABS and Sorgente intend to bid at the auction, The Real Deal reported.
The partition sale is the latest attempt to resolve disputes among the three real estate owners and Silverstein that began in 2017, after anchor tenant MacMillan Publishers — which occupied all but one story within the building — announced its intentions to vacate the property by 2019.
Due to the unusual ownership structure in place, finding a tenant to replace MacMillan reportedly became a source of frustration for GFP, ABS, Sorgente and Silverstein. As partial owners under a tenants-in-common agreement, any of the four owners could occupy and use the entire property and veto serious decisions, Real Estate Weekly previously reported.
In previous filings, GFP owner Jeff Gural alleges that Silverstein wanted to replace MacMillan without providing upgrades that were legally necessary to the building. Silverstein also allegedly floated the idea of physically divvying up the landmarked building.
“It boggles the mind to suggest that we could nevertheless agree on a plan to physically divide this building into five smaller, independent properties, none of which would be marketable — and then agree on a plan as to how that work would be financed,” Gural wrote in a filing, per TRD.
But Silverstein — who inherited his share in the property from his father, a New York banking attorney, according to REW — alleges that Newmark never marketed the property after MacMillan announced its departure. He also said in a court filing that Gural was offering the office space to Knotel, in which Newmark CEO Barry Gosin had a large stake (and Newmark now owns), for less than $44 per SF with a multidecade renewal period, TRD reported. Gural is chairman emeritus of Newmark.
After the Knotel deal fell through, the property owners agreed to renovations, but ran into further trouble when Silverstein balked at the $80M price tag. In the filings, Silverstein alleges that Gural inflated costs of labor and of materials, including marble for the lobby renovations.
Gural said the suit is a result of the ongoing disputes and hopes to oust Silverstein via the auction, The Real Deal reported.
The Flatiron Building was the first in New York designed by architect Daniel Burnham, and was the tallest building north of the Financial District when it was completed in 1902. It was named a National Historic Landmark in 1989.
