A holdout delays US developer's high-rise dream

New York

FIRST came the scaffolding, another lattice-like structure blocking a sidewalk in front of a Manhattan building. And just in case the tenants in five buildings near 57th Street and Fifth Avenue did not get the message, demolition work started on a sixth, adjoining building.

After decades spent buying one small parcel after another across from his masterwork, the swooping office tower at 9 W 57th St, developer Sheldon Solow is finally ready to build.

Mr Solow, a billionaire who turns 89 this month and is now in a hurry, hired Skidmore Owings & Merrill to design a sleek 54-storey hotel and condominium tower to take its place on what has become known as Billionaires' Row.

There is a problem, however. The owners of Metropolitan Fine Arts and Antiques, and the largest remaining tenant at 10 W 57th St, do not want to go. They contend that they have a valid lease and do not want to leave what they believe is a fabulous location, near the plush Bulgari store and opposite Bergdorf Goodman.

Early in June, Mr Solow's company issued a five-day notice terminating the lease. The two sides are scheduled to fight it out in state Supreme Court on Thursday.

"The lease was cancelled," Mr Solow said in an interview. "They violated it."

In the annals of New York's real estate, battles between landlords and tenants and even between property owners are common and as bloody as any cage fight in a city where the median price for an apartment is more than US$1 million.

Over 60 years as a developer, Mr Solow has acquired a well-earned reputation for patience, stubbornness and ruthless litigation, with hundreds of lawsuits under his belt against enemies, friends, banks and blue-chip tenants.

But he is going up against David Rozenholc, the lawyer representing Metropolitan. Mr Rozenholc fought Donald Trump to a standstill in the 1980s when he tried to evict tenants at 100 Central Park South in order to build a condominium tower.

More recently, Mr Rozenholc won a US$25 million payout in 2015 for two tenants to vacate a small apartment building on the Far West Side where a developer plans to erect a massive office tower.

Mr Rozenholc contends that the developer began erecting "dead of the night" scaffolding in March in front of Metropolitan Antiques and four other buildings on the south side of 57th Street for no reason other than to discourage customers from entering the store, with the goal of forcing Metropolitan to vacate.

In June, Mr Solow issued an eviction notice, citing technical violations of the lease, though the developer cashed the rent cheques - US$283,000 a month - from the owners of Metropolitan, Irving and Samuel Morano.

"The scaffolding was put in place for one reason," Mr Rozenholc said, "so customers don't come in. He obviously wants to develop the site, so they decided to create some leverage to push the tenant out."

A sign in the not-so-visible front window of Metropolitan states: "Storewide Sale 50% off." There were no customers inside.

Mr Solow's eviction notice cited a series of lawsuits brought by unhappy customers who argued that they had been cheated by Metropolitan. And then there was the arrest of the Moranos in 2016 for the illegal sale of ivory - 126 items, including intricate carvings and uncarved elephant tusks. That case is still pending.

Mr Rozenholc said that most of the lawsuits were settled or dismissed. As for the ivory artwork, he said that the Moranos' licence to sell ivory had expired in 2014 without their knowledge.

Mr Solow, who has been relatively quiet for the past decade, suddenly has four projects in development. His son, Stefan, has also gotten more involved in the family business.

Mr Solow can be notoriously picky. He refused to rent the basement space at 9 W 57th for 30 years until he found the right restaurant for the space - a restaurant he created, Brasserie 8 1/2.

Even today, his office tower, which commands some of the highest rents in the city, has a large block of vacant space - 30 per cent, according to some brokers. Mr Solow has been holding out for years for companies willing to pay a hefty US$200 per square foot.

Mr Solow is also building a 42-storey black glass residential tower designed by architect Thomas Meier at First Avenue and 39th Street, on a portion of the 9.2 acres he bought from Con Edison in 2000 for US$680 million.

On the east side of First Avenue between 38th and 41st streets, Mr Solow is actively looking for tenants for a planned bio-tech building on a lot that has sat fallow for a decade.

"He's really revved up about it," said Paul Wexler, a principal at Wexler Healthcare Properties and a broker for the project.

Next to 9 W 57th St, the 50-storey office tower he built in 1974, Mr Solow has started work on what will be a 19-storey residential building that will be topped by a duplex with views of Central Park.

Developers have built a half-dozen tall towers with apartments that only a billionaire could afford on 57th Street. The market for US$100 million apartments has stalled in recent years. Mr Solow is betting that the market will recover.

He bought his first of six parcels on the south side of 57th Street - 6 W 57th St - in 1977, according to Real Capital Analytics, a real estate research firm. Most likely, he was simply blocking a rival developer from erecting a tower that might obscure the south-facing views of his office tower on the other side of the street.

He did not purchase the second and third parcels until 2007. He lost a bidding war for 16 W 57th St in 2011 to developer Gary Barnett, who later sued Mr Solow for obstructing his plans to build his own tower. Mr Solow finally bought that building last year for US$128 million, US$48 million more than what Mr Barnett paid in 2011.

"I wasn't ready to move," Mr Solow said, explaining his renewed activity. "I had to put all these things together. You don't assemble land in a year." NYTIMES