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NY REAL ESTATE COMMERCIALApril 29, 2012, 10:52 p.m. ET.Standoff at Central Park .
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.smaller Larger By ELIOT BROWN

The exterior of 220 Central Park South, which is slated for demolition so a new tower can be built in its place.

Mr. Barnett's Extell Development Co., which is developing the soaring 1,004-foot One57 condominium tower one block to the east, bought into the lease of the underground parking garage in Vornado's building a few years ago, according to people familiar with the matter. It runs about five more years, the people said.

Thus far Mr. Barnett has resisted Vornado's attempts to rid him from the building through a buyout or settlement. But now Vornado is stepping up the pressure as it moves forward with demolition preparations, which call for tearing down the building above the garage, stopping at the second floor.

Talks between the two sides also are continuing. "We're trying to take down the building and then we'll come up with a first-class building," Vornado's chief executive, Michael Fascitelli, said in a brief interview last week.

As to Mr. Barnett, he said, "We have a little issue there, but we're trying to resolve it."

Extell, however, believes tearing down the building atop the garage could be dangerous.

"We think it would show very poor judgment to attempt to demolish an occupied building, especially when there is no possibility of construction for a number of years. God forbid something bad happens for no purpose," a spokesman said in a statement. "We have the greatest respect for the leadership of Vornado and would be surprised if they actually moved to demolish."

Vornado, one of the city's largest office and retail landlords, filed with the city for demolition permits last month. Scaffolding is going up on the edges of the white-brick building, which was cleared of residential tenants in 2010.

Should the two sides fail to strike a deal, Vornado could still proceed with demolition. But demolition would likely be more complex and expensive if the garage isn't vacated.

Write to Eliot Brown at eliot.brown@wsj.com