A bigger development site can produce greater profits. But how exactly developers stitch together those parcels, a process that can make or break projects, often plays out privately.
However, an unusual amount of transparency has surrounded the push by Legion Investment Group to put up a luxury tower in the Gramercy neighborhood, thanks to a battle waged in court by a person in the path of the new project. And a look at the sausage-making is revealing about how developers try to get their way.
Legion seeks to build a 20-story condo at Third Avenue and East 21st Street. To do so, the firm, whose CEO is Victor Sigoura, seems intent on the condo not just sitting on Third but extending deep into the block toward Gramercy Park. That push eastward would necessitate acquiring real estate from the 38 Gramercy Park North co-op that stands there today.
The biggest prize for Sigoura would be to purchase the five-story building that houses the 33-unit co-op. By adding that parcel to his site, Sigoura would gain a lot that directly faces the private park, a legal requirement for use of the leafy green space.
In 2022, Sigoura offered the co-op $40 million to buy its building, records show, before upping his bid to $42 million. Finally, in 2023, he dangled $45 million, apparently eager to outmuscle bids from the Brodsky Organization ($30 million), Slate Property Group ($28 million) and Macklowe Properties ($25 million), according to documents in the case. The brokerage that provided the documents, Colliers, had no comment.
Sigoura also invited No. 38’s shareholders to take a tour of his breakout Upper East Side condo project, 109 E. 79th St, filings show, perhaps to impress any fence-sitters with his level of craftsmanship. And the charm offensive seemed to work: Shareholders voted 25 to seven to sell to Sigoura, though the deal has not yet closed.
But the ex-real estate lawyer, who did not respond to a request for comment, also launched a separate campaign that seemed aimed at letting him acquire a bit of No. 38 if he could not have it all. Indeed, Legion offered to buy a small slice of air rights over a portion of the co-op so Legion’s condo could jut slightly eastward.
Whether a 25-foot cantilever into No. 38’s air space would be enough to qualify Legion’s condo buyers for access to Gramercy Park is unclear. Legion has denied that motivation, and the Gramercy Park Block Association, the nonprofit park operator, would probably decide.
But even if the bump-out was simply conceived to make the apartments roomier, it touched off a battle royale at No. 38. Indeed, two years ago resident Joseph Cogan sued the board there for allegedly entering into a sweetheart deal with Legion for the air rights, which Cogan claimed were undervalued dramatically. The board denied any wrongdoing.
A Manhattan Supreme Court judge ultimately found for Cogan, ruling in May 2023 that the co-op “breached its fiduciary duties in failing to perform adequate due diligence.” But as part of its settlement, the board shelled out $1.5 million to purchase Cogan’s one-bedroom, removing the chief obstacle to the air rights sale, which closed on Feb. 27 for $4.2 million. And the building could follow suit.
In the meantime, Legion appears to already have much of what it needs. Also in February, the developer finalized the purchase of four parcels on Third, a nearly 7,000-square-foot sweep for which it paid $68 million.
256 Third Ave.
One of four sites acquired by Legion Investment Group for a condo project, No. 256, a four-story brick prewar mixed-use site, is perhaps the most prominent. Occupying its commercial space is Plug Uglies, an Irish bar that knows something about the neighborhood’s gentrification. From 1997 to 2015, the bar, named for a 19th-century New York gang (the Dead Rabbits were a rival) was located across the street at 257 Third, before Alfa Group razed the site for 20 E. 21st St., a 20-story, 67-unit condo. Now, development will likely chase Plug Uglies away again, though it does already have a secondary location on First Avenue on the Upper East Side. Above the bar are four renovated apartments; a three-bedroom with two baths in 2021 was asking $3,700 a month. The site, previously owned by Ki-Sook Choe and Hee-Nam Bae, sold for $17.1 million. The Korean investors paid $5 million for it in 2009, according to the city register. The pair were also the sellers of the trio of other sites on the block that Legion snapped up: Nos. 252, 254 and 258 Third Ave.
248 Third Ave.
Shortly after being created by developer Samuel Ruggles in 1831, Gramercy Park, one of the few members-only green spaces in the city, awarded keys to the five dozen or so tax lots surrounding the two-acre, iron-fence-lined site. Through the years, development subsumed some of those parcels; there are about three dozen qualifying sites today, including 38 Gramercy Park North. But the rules remain generally the same. After paying an annual assessment for the park of $10,000, the park-facing sites get two keys, which are doled out by doormen in some cases. But residents of the buildings can also apply for their own personal version for an annual $350 fee. Around 400 are reportedly in circulation. Losing a key is a big deal; a replacement costs $1,000. Those copies are made by the hardware store in this Italianate building, Warshaw. But that’s not the extent of the store’s key-making business. Every year the park changes its locks for security purposes, necessitating a new wave of keys. The Warshaw family has owned the 5,700-square-foot property, which also has four apartments, since at least the 1970s, records show. The city puts No. 248’s market value at $3.8 million, suggesting it could actually sell for about twice that.
151 E. 20th St.
This complex, made up of side-by-side brick buildings, is a condo representing a much earlier era. Developed in 1987 from a rental complex that once served as a hospital, the condo nabbed $2.5 million back in the day for sales of its studios and one-bedrooms, according to its offering plan. In 1989, a pipe exploded nearby under Third Avenue, killing three people, sending asbestos raining down on the block and leaving a crater in its wake. No. 151 used its $125,000 in Con Edison settlement money to refurbish its facade, according to news reports. As bars move and close, the area has gotten sleepier, though the watering hole Barfly N.Y., which appears to have anchored one of the building’s two retail berths since the 1980s, endures. The other storefront, which uses the address 246 Third, houses Gramercy Bagels. But years ago, when the Third Avenue corridor was dotted with German businesses from the East Village’s Kleindeutschland all the way to the Upper East Side, the space was apparently home to a butcher known for his wursts.
34 Gramercy Park East
This Hogwarts-like brownstone-and-brick edifice made a major wager when opening in 1883 as an early co-op: Would wealthy New Yorkers leave single-family townhouses behind and plunk down money instead for an apartment in a multifamily building? To make sure buyers said yes, the building made itself taller than usual, at 9 stories, which required installing recently-invented elevators, according to profiles of the building. No. 34 also created an on-site restaurant for convenience. And it seemed to work, as No. 34 has been a desirable address ever since. Margaret Hamilton, who played the Wicked Witch of the West in The Wizard of Oz, once lived there. More recently, The Tonight Show host Jimmy Fallon was a shareholder. He bought his first apartment in the building in 2002, and after marrying movie producer Nancy Juvonen in 2007, began combining it with next-door units and upstairs ones. By 2021, when they put it on the market, the couple’s home encompassed four units, three floors and about 5,000 square feet, as well as quirky rustic touches like an antler chandelier and fieldstone fireplace. The co-op sold in 2022 for $10.8 million, which appears to be a building record by a long shot.
38 Gramercy Park East
Built as a rental in 1930 and taken co-op in 1988, this 5-story, 33-unit site has been at the heart of a drawn-out battle pitting a luxury developer, Legion Investment Group, against a shareholder who opposed selling air rights to Legion for a next-door condo project. The co-op board ultimately paid the opponent, Joe Cogan, $1.5 million for his apartment, which had cost $620,000 in 2006. It’s not the first time that the co-op has been caught up in controversy. In 2010, the building sought to add a wine bar in its basement retail berth. But some neighbors worried about Gramercy’s residential character pushed back against the plan, derailing it. Singer and songwriter Rufus Wainwright once owned a home in the building, which sits in an enclave with deep artistic roots.
36 Gramercy Park East
Designed by Texas courthouses architect James Riely Gordon in 1910, this 12-story apartment building can seem like an inspiration for the 1913 Woolworth Building downtown. Both are awash in Gothic details — a pair of knights in armor flank No. 36’s front door — and both have white terra-cotta facades. No. 36 was also cutting-edge in its day for being among the city’s first purpose-built co-ops, offering shareholders a cut starting at around $9,000, records show, though by the 1940s it seemed to function as a rental. Artsy types flocked, perhaps drawn to the area by organizations like the Players Club (16 Gramercy Park South) and the National Arts Club (at next-door No. 15). Actor John Barrymore, sculptor Daniel Chester French and playwright Eugene O’Neill were once tenants. In 2010, developer Maurice Mann began a condo conversion expected to eventually generate $144 million, though 10 of the 57 units, which function as rentals, remain unsold.
37 Gramercy Park East
If Legion canvassed other properties in the neighborhood in its search for valuable park frontage, it probably knocked on the door of this building, a five-story rental with six apartments next to 38 Gramercy Park North. Although not even 20 feet wide, the prewar site stares directly at Gramercy Park’s ginkos and elms and thus owns keys to the park’s gates; No. 37’s rear wall also sits near Legion’s Third Avenue sites. Likewise, the 8,700-square-foot structure appears to have a single owner, the Ben-Dov family, and so any deal would not require sign-offs from a long list of shareholders like at the co-op No. 38. But the Ben-Dovs appear to be keeping their building in the rental column, at least for now. The duplex penthouse in the elevator building, which comes with a private roof deck, was asking $18,000 a month in December.
C. J. Hughes , 2024-03-20 11:03:04
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