Tuesday, October 4, 2011

East 57th St Holdouts Creating Construction Headaches At Former Drake Site

California-based private equity firm CIM Group and Macklowe, its development adviser, are itching to get started on a huge 1,420 mixed-use tower. Much of the bulk of the 70-story Rafael Vinoly designed tower would rise on the barren, former Drake Hotel site off East 56th Street, with the new building wrapping around 450 Park Avenue, to front on retail-heaven East 57th Street.

Wherever Harry Macklowe and a new development project are involved, you can count on an entertaining tussle involving property owners and tenants who won't budge. Offers are made to move out, and occupants balk; and demolition of Macklowe-controlled properties begins before he's nailed down the ones next door.

Take East 57th Street between Park and Madison Avenues, site of seven elegant, mostly low-rise retail buildings - just west of the corner office tower at 450 Park Avenue. The owners a townhouse in the middle of the massive building site near the former Drake Hotel, is now snared in a demolition squeeze.

After two years of pressure, Turnbull & Asser, the British shirt maker owned by the family of Harrods' owner Mohammed al-Fayed, is still refusing to sell its townhouse at 42 E. 57th St. -- one of seven store buildings Macklowe hoped to raze for the new project, or perhaps incorporate into its facade if the right retail tenant came along. Turnbull bought No. 42 E. 57th St in spring 2008 for $32.5 million, says it has no intention of leaving the block. "We have wealthy customers who stay at the Four Seasons Hotel across the street, and we're not about to lose them."

CIM acquired the Drake Hotel site from Macklowe's lenders when he defaulted in 2008, but kept Macklowe in the picture as its development "consultant." Prior to losing title, Macklowe had also purchased the retail buildings at 38, 40, 44, 46, 48 and 50 E. 57th St., which became part of CIM's assemblage. CIM and Macklowe have negotiated for months about moving the store four doors east to 50 E. 57th St., an equally attractive building owned by CIM. But no deal has yet been struck.

Meanwhile, demolition has already begun at 44 through 50 East 57th, and a Buildings Department demolition permit recently went up on vacant 38 and 40 E. 57th St. next door to Turnbull. The buildings are covered in plywood and appear not long for this world.

Read more about the mega tower slated for construction at 440 Park / 50 East 57th Street, in Wednesday's ElectricWeb | Blogger.