A fight that began over the cost of a renovation to make sure that one of Manhattan’s iconic buildings was not remembered as a death trap—and instead could be passed down as a family legacy—was settled on the steps of the old County Court House on Tuesday.
The second time was the charm for Jeff Gural and his partners at a rerun of the public auction of the Flatiron Building, a court-ordered partition sale to settle a dispute between Gural and Nathan Silverstein, who owned 25% of the wedged-shaped landmark at the intersection of Fifth and Broadway.
This time, Gural outlasted four other bidders and took the prize at $161M, far less than the $190M Jacob Garlick bid at the first auction in March—before Garlick defaulted and took a powder without leaving a $19M deposit.
Registered bidders were required on Tuesday to show up at the historic court building at 60 Centre Street with certified checks for $100K made out to the auction’s referee, attorney Peter Axelrod.
Since the 75% share of the Flatiron Building that was held by Gural’s GFP Real Estate and its partners, including Sorgente Group and ABS, could be used as a stake in the partition sale, the partners will now pay Silverstein $40M for his 25% share and assume full ownership of the tower, which was the tallest building in Manhattan when it was built in 1902.
Silverstein and Garlick did not appear at Tuesday’s auction. When auctioneer Matthew Mannion brought down the gavel on the winning bid, we asked Gural what he wanted to say to Silverstein.
“I feel bad we weren’t able to keep him as a partner. I have nothing against Nathan—he was more mad at me than I was at him. We had a completely different philosophy,” Gural told GlobeSt.
Gural said the split with Silverstein developed when Gural and the other partners pushed forward with a renovation of the Flatiron Building that had as its top priority eliminating a glaring safety hazard at the century-old icon: a single staircase that was the only way out in the event of a fire.
“It was legal but it was very unsafe and it worried us. It had a sprinkler system, but only one stair and we needed to put in two means of egress. Converting elevators—and making sure construction workers aren’t trapped in there—was a project with a long lead time,” Gural said.
“Truthfully, it’s been an ordeal,” he added.
The cost of renovating a century-old landmark—which requires the restoration of a Beaux Arts-style façade that must match the original in every detail—ballooned to more than $100M as costs rose amid surging inflation.
“ didn’t understand why it cost so much to renovate the building. He thought if it’s going to cost $100M, Jeff must be crazy,” Gural told us.
The original plan for the renovation would have kept the 22-story Flatiron Building as an office tower, but Gural said that under current market conditions he and his partners will most likely decide to undertake a full or partial conversion to apartments.
“We’re thinking of building apartments on the upper half and keeping offices on the bottom or converting the whole thing into apartments,” Gural said. “You need a special permit from city planning to convert to residential, so that’s one more hurdle.”
Gural estimated the conversion could be completed in about 18 months. “We’ve already done a lot of work,” he said.
While he’s been busy duking it out for the ownership of the Flatiron Building with Silverstein during the past two months, Gural told us he’s been coming up with creative ways to boost the occupancy level of GFP’s portfolio of NYC office buildings in an era of hybrid work patterns.
“We had a contest in our buildings, when you came to work, you could enter into a contest to win tickets to a Taylor Swift concert at the Meadowlands,” he said. “I just gave away 90 tickets won by office tenants of ours who scanned the sign in our buildings when they came to work.”
We asked a friend of ours who worked in Manhattan for 25 years if anyone ever offered them concert tickets to come to work.
“No, just parking tickets,” the guy said.