By Konrad Putzier
There is a mysterious grey square on the otherwise well-labelled site map of Brookfield’s Manhattan West project.
It is nestled in the middle of a U-shaped string of planned restaurants, retail units, an office tower and a hotel, exactly where planners might envision a public plaza.
As it turns out, the grey square is a 13-story office building owned by Raju Shah’s Vectra Management Group. It is the only building on the block not under Brookfield’s control, and has become the figurative thorn in the side of the company’s $4.5 billion mixed-use megaproject.
For years, Vectra has resisted Brookfield’s attempts to buy the pre-war building at 424 West 33rd Street, forcing the company to build around it, measure every tiny vibration and limit construction work during business hours.
But Brookfield isn’t the only party with reason to be unhappy. Construction noise and the prospect of less daylight once the towers are complete are a problem for Vectra, and the company has been forced to offer tenants rent discounts to keep the building fully leased.
A sale would be a win-win situation right out of a business school textbook. That it hasn’t happened is, unsurprisingly, due to differences over money.
“Brookfield hasn’t made an offer that we found acceptable,” Vectra’s managing director Raju Shah told Real Estate Weekly. He added that he believes the building will ultimately benefit from the new development at Hudson Yards, Manhattan West and Moynihan Station, and that Vectra would be fine with keeping it. But between the lines, Shah indicated that a sale might still happen. “There is still time,” he said. “We say it’s not for sale, but of course there is a price for everything.”
At Manhattan West, Brookfield plans to build three mixed-used towers, low-rise retail buildings, a hotel and a public plaza between 32nd and 33rd Streets and 9th and 10th Avenues. It has already begun covering up the railroad tracks that make up most of the block and will remain operational. Seven of the 16 concrete spans that will cover the tracks are in place, and the company said it plans to have finished the platform by the end of the year.
Shah speculates that the company can still change its plans at this point and might have an incentive to buy the 200,000 s/f building. Tearing it down would create enough space for a fourth tower to replace the low-rise buildings currently planned around Vectra’s building.
Vectra, a private real estate investment, development and management firm, owns a number of properties across the U.S., including a portfolio of buildings in the Meatpacking District at 14th Street and Ninth Avenue.
According to Shah, Vectra and Brookfield aren’t currently in talks over a sale, leaving the site’s engineers with a major headache.
In order to avoid any damage to 424 West 33rd’s foundation, engineers and monitors check vibrations, helped by a system that triggers an alarm each time they reach a certain strength. Shah also said he pushed Brookfield not to do its blasting during business hours.
Brookfield declined to comment for this article. A company executive had previously confirmed that Brookfield had inquired about buying 424 West 33rd Street.
Vectra took over the building in late 2000. At that time, Brookfield already controlled most of the block, but plans for a large mixed-use project didn’t take off until the company purchased a parcel at its north-east corner in the mid-2000s.
First plans for Manhattan West were filed in 2008, but ended up being shelved during the recession. Construction finally began in January 2013.
Shah didn’t specify when Brookfield approached him about buying 424 West 33rd Street.
Robert Knakal, chairman of commercial brokerage Massey Knakal, said there are compelling reasons for Vectra to keep the building. “New development of any kind enhances a neighborhood,” he said, adding that construction work is not particularly disruptive to adjacent offices.
Any sale would be complicated by the building’s ownership structure. In 2012, Planned Parenthood bought the 104,000 s/f office space it had previously leased from Vectra for a reported $34.8 million. Although Shah said Vectra owns the building’s exterior and air rights and can build additional floors, no one can tear it down without first buying out Planned Parenthood.
For now, it seems that 424 West 33rd Street is destined to be a very lonely remnant of the old New York amid the shiny new world of Manhattan West.
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