What a view costs: Wealthy Chelsea residents paid Gary Barnett well over market rate for “development” rights
Residents paid roughly $560 per square foot of available development rights
By Kevin Sun | July 24, 2019 07:00AM
206 West 17th Street, 116 7th Avenue, and Extell Development’s Gary Barnett (Credit: Google Maps)
Non-developers rarely find themselves on the buy side of an air rights deal – and when they do, it appears that the prices are sky-high.
As reported by the New York Times on Monday, residents of the 11-unit loft building at 206 West 17 Street, also known as City Prairie, shelled out a hefty $11 million back in 2016 to buy development rights from Gary Barnett’s Extell Development, simply to preserve their Empire State Building views.
An analysis by The Real Deal found that the condo unit owners paid a significantly higher price per square foot than what most developers were paying on comparable deals at the time. The residents at City Prairie don’t seem to regret the decision, either.
“It was a big number, and I would say it was well worth it because the apartment has views on the corner, and if a building had gone up there I would have never gotten the price that I got.” Douglas Elliman agent Doreen Courtright, who sold the eighth-floor unit of the building for $9.75 million last month, said. The sale of that full-floor apartment was the first (and so far only) sale at the building since the air rights deal.
“I work with a lot of buyers, and with every buyer the first thing they do is look out the window and go, ‘Oh, could a building go up over there?’,” Courtright said. “And even if they did get an accepted offer, the lawyer who would be representing them would do their due diligence and find out that there was a potential for development on the corner and then the deal could fall apart, and that happens all the time. So the fact they did buy the air rights was huge for us getting our price.”
Barnett could not immediately be reached for comment.
Under existing zoning, the maximum floor-area ratio the two merged lots could have allowed was 7.52, yielding a roughly 31,500-square-foot residential or mixed-use development. After selling its development rights, Extell ended up just building a three-story, 12,000-square-foot retail-and-office project instead.
Paying $11 million to take about 19,500 square feet off Extell’s hands means that the loft residents paid over $560 per square foot of development rights, which makes it one of the pricier air rights deals by square footage in recent memory.