A landmark Manhattan building’s current owners are at odds, and the property will shortly be put up for auction to the highest bidder.
On March 22, the 121-year-old Flatiron Building, which is now vacant, will be put up for auction in a partition sale as a result of a decision in the ongoing legal dispute between its many landowners. Following a 2021 lawsuit by Sorgente Group, Jeffrey Gural’s GFP Real Estate, and ABS Real Estate Partners, who collectively own 75% of the property, a New York state judge in January issued an order permitting the auction to proceed, the Real Deal was the first to announce.
The steel-framed 175 Fifth Avenue skyscraper, which was finished in 1902 and serves as the namesake for the area, was the subject of a lawsuit by the co-owners following a deadlock with Nathan Silverstein, who owns 25% of the structure.
The parties were stuck in a very expensive standoff over the future of a very expensive piece of real estate because of the shared ownership of the building, which gives every owner veto power on every significant building decision.
After MacMillan Publishers, who at the time had all 21 floors of the triangular building, declared in 2017 that it would be leaving within two years, the situation became intolerable.
After that, Silverstein made a number of “preposterous” suggestions, according to Gural, including not upgrading the property between the time MacMillan left and when a new tenant moved in. This was despite the fact that upgrades were legally required to re-rent the building and for fire safety, Gural claimed in an affidavit.
The Real Deal said that Gural wrote that Silverstein had the idea to divide the property into separate ones despite the building being a landmark. This was impossible because of the property’s historic status.
Gural stated in the statement that it “boggles the mind” to suggest that we could nonetheless agree on a plan to physically divide this structure 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. We have been attempting to resolve these issues with Mr. Silverstein for years, but he has put off, fought, and ultimately refused to accept the plaintiffs’ suggested business plan.
Meanwhile, Silverstein alleges that Gural attempted to rent the space to Knotel, which Newmark’s Barry Gossin had a large stake in, for a “exceptionally low cost per square foot” and an exceptionally long term after Newmark neglected to advertise the property when MacMillan announced it was departing.
According to Silverstein’s affidavit, the “proposed rental agreement” would have committed the property to an unproductive lease for an extended length of time.
According to a prior filing made by Gural, the Sorgente-GFP-ABS consortium would probably make a bid during the auction later this month, according to the Real Deal.
From the NY Post.