Developers home in on far W. Side

Subject: Developers home in on far W. Side
Date: 12/12/2004 12:23:45 AM Eastern Standard Time
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Developers home in on far W. Side
Buy up sites before prices take off; plans for mixed uses fit expected rezoning
Crains NY Business
By Christine Haughney
Published on December 13, 2004

Developers large and small have begun jockeying for prime plots of land on
the far West Side, now that the expansion of the Jacob K. Javits Convention
Center has been approved and rezoning of the area early next year seems
almost assured.

In recent weeks, residential developers have begun plucking up sites in
hopes of getting in before land prices take off. Major commercial
developers are also expressing interest in the area, and some already are
hammering out plans that fit current rezoning proposals. As a result, real
estate lawyers say they're getting calls from a slew of new clients on
zoning issues.

"We've seen interest in that neighborhood from small-timers to real estate
investment trusts," says Robert Knakal, chairman of Massey Knakal Realty
Services Inc. "Every segment of the community is interested in buying in
that area."

Some landlords and developers, however, say it's too early in the game to
make a move and are waiting to see exactly what kind of rezoning takes place.

Risky venture

"There's always an element of risk until the zoning is enacted," says Eric
Anton, an Eastern Consolidated Properties Inc. managing director working on
the sales of many 50,000- to 150,000-square-foot properties in the
neighborhood. "Everyone is trying to figure out what the ... best use is
for their property."

Interest in the area that lies roughly between West 28th and West 41st
streets and Eighth to 11th avenues has been building since the City
Planning Commission voted to approve the West Side zoning plan last month.
Fuel was added last week when Gov. George Pataki signed legislation for a
$1.4 billion plan to expand the convention center. The City Council also is
scheduled to vote on the proposed zoning changes in January.

Eastern Consolidated sales brokers say that the number of West Side owners
interested in selling their properties has doubled from a year ago. "We're
seeing a lot of construction companies, storage companies and trucking
companies thinking about selling," says Mr. Anton.

Prices moving up

Developers already are paying top dollar for some prime sites. In a sale
recently closed by Massey Knakal, Mendel Mendlowitz bought the entire
eastern block on Ninth Avenue between W. 35th and West 36th streets for $22
million. The price had jumped 57% over the $14 million paid one year ago by
the seller, AAG Management.

Some developers are so confident in the area and the city's need for more
housing that they're not waiting for any more government approvals. Twining
Properties-in partnership with The Related Cos. and MacFarlane
Partners-recently closed on a site at 440 W. 42nd St., at 10th Avenue,
without the promise of any zoning changes. The developers plan to construct
a tower with retail stores, rental apartments and condominiums.

"The far West Side has got to happen," says President Alex Twining.
"There's only so much land left in Manhattan."

Grander plans

Some major developers that already own sites in the area are using the
recent proposed zoning changes to firm up their plans. Brookfield
Properties, which planned to construct a 2 million-square-foot office
building at 401 W. 31st St., between Ninth and 10th avenues, is expanding
the project to a 2.5 million-square-foot tower featuring both offices and
residences.

"There's more flexibility for the use, which brings us back to the drawing
board," says Dennis Friedrich, Brookfield's president and chief operating
officer.

Even the normally reticent chief executive of Vornado Realty Trust, one of
the neighboring area's largest landlords, says he's interested in expanding
west beyond his firm's core properties, which line Seventh Avenue. Vornado
already is bidding to develop the James A. Farley Post Office on Eighth Avenue.

Seal of approval

"We think (the far West Side blueprint) is a very, very, very enlightened
plan, and we support it," says Steven Roth.

That type of interest is creating a pickup in business for the city's real
estate lawyers. In the last several months, Fried Frank Harris Shriver &
Jacobson lawyers have been barraged with projects from developers of all sizes.

"We are very busy with zoning, land use and development projects on the
West Side," says Jonathan Mechanic, chairman of the law firm's real estate
department.

Still, other attorneys find that the kinds of queries they are receiving
show that most action is still far off.

"I've not had a single case where someone has come to me with a firm plan
for development," says Sandy Lindenbaum, head of Kramer Levin Naftalis &
Frankel's land use group. "We're going to have to be further along."