http://therealdeal.com/issues_articles/barnetts-big-buildout/
Barnett’s big buildout
While Gary Barnett has been making waves for a while (and setting records recently), he’s now working on more Manhattan projects than any other developer
February 01, 2013
By Adam Pincus
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Ask most people in the industry today and they’ll tell you Gary Barnett is the most aggressive of the large real estate developers in Manhattan. His appetite for risk among his peers is second to none. But given how many projects he has in the works — his firm, Extell Development Company, is currently working on roughly a dozen, including building two of the tallest residential buildings in the Western Hemisphere — and with the level of media attention he gets, you might think he would be more frenetic and in-your-face.
...The standout is, of course, One57, the Christian de Portzamparc–designed, 1,050-foot-tall überluxury hotel and condo he’s building at 157 West 57th Street. That project has garnered most of the media attention he’s received lately, with its record pricing and a recent crane mishap. However, there are at least 11 projects with a total of nearly 6 million square feet that he’s currently working on in New York City, including his “other” 57th Street project : a 1,550-foot- tower at 225 West 57th Street, between Broadway and Seventh Avenue. Barnett filed plans with the city’s Department of Buildings in November 2012 that call for 233 residential units at the 1.2 million-square-foot structure. The building will also include the city’s first Nordstrom at its base.
In addition, he’s expected to close this quarter on a $150 million to $200 million purchase of a 1 million-square-foot residential site formerly occupied by a Pathmark grocery store on the Lower East Side. “I don’t know how he can manage so much at once. We could never do that,” said Thomas Elghanayan, CEO of TF Cornerstone, who has been an active developer of residential and commercial properties for decades. Driving all of that activity is, of course, Barnett, who’s known as a steel-nerved risk-chaser. “His risk tolerance is off the charts,” said one executive at a rival development firm, noting that Barnett began building One57 with no construction loan in place, which insiders say is almost unheard of.
....“I think that it is unlikely that we would ever get as big as, [for example], Tishman Speyer. I don’t aspire to get to that kind of size,” Barnett said, noting that he’s wary of “the headaches” that come with a much larger firm. “Right now, we are not really looking outside of New York. We live here, and it is a nice place to be focused,” he added. Barnett’s stance is, perhaps, not surprising. He’s never taken a standard approach to real estate. In fact, he prides himself on going after sites and deals that his rivals are either unwilling to pursue or simply not aware of. His two large 57th Street towers — One57 and 225 West 57th Street — both sit on properties assembled over the years, many by company executive vice president Dov Hertz, who joined the firm in 2003. For example, the first property acquired for One57, at 157 West 57th Street, was a 49-year lease inked on behalf of Extell by Feldman.
I always liked doing puzzles,” said Barnett. “It’s kind of fun to sort out the pieces and put it together.” Just buying a property and developing it, “what’s exciting [about that?]” he asked. In addition, Barnett said that if his firm had not assembled the 20 parcels that make up the One57 site, he doesn’t think anyone else would have. “If we had not gotten it done, no one else would have,” he said. “It never would have gotten done.” He said the assemblage strategy provides a leg up because it widens the options of potential development sites to choose from.
....In addition, Extell is one of the city’s most active sellers, unloading $550 million in potential development sites and projects over the past 12 months, an analysis of data on Real Capital Analytics showed. The firm’s currently under-construction or in-active-development projects total at least 6.2 million square feet, which does not include its 1.7 million-square-foot One Hudson Yards, which is waiting to score a tenant before moving forward. By comparison, it’s closest rival in terms of square feet and number of deals is Related, which currently has eight active developments in Manhattan totaling 4.6 million square feet.
There’s also an approximately 725,000-square-foot development site at 547 10th Avenue, where in 2011 Barnett signed a 99-year ground lease with the estate of Sol Goldman, and last summer he bought air rights from the neighboring Roman Catholic Church. And the firm is assembling a smaller site at 1687–1693 Third Avenue between 94th and 95th streets. The roster doesn’t end there. There’s another megadeal coming down the pike on the Lower East Side. Extell — a long-rumored buyer — is in contract to acquire a 1.1 million-square-foot development site at 227 Cherry Street for approximately $150 million to $200 million, insiders confirmed. The seller was advised by Eastern Consolidated. Extell had been in contract to buy the site for $87 million in 2007, but backed out when the market collapsed and, according to court records, sacrificed its $6 million down payment. At One Hudson Yards, a site at 560 West 34th Street on 11th Avenue with 1.7 million square feet, Extell has hired commercial firm Jones Lang LaSalle to secure an office tenant before construction begins.
More recently, he scored a victory against Related, which is headed by Jeff Blau and Stephen Ross, when he landed the Nordstrom deal. (Related, which declined to comment on Extell for this story, and others had spent years wooing the department store as an anchor tenant for the retail mall at its massive Hudson Yards project.)
....But Barnett denies that besting other developers in the pursuit of deals is personal. “It’s not really about competition. I imagine some people have that feeling, that it is one-upmanship. But I totally don’t think like that, and people who know me, I think, realize that,” he said. For example, at 220 Central Park South he’s engaged in an ongoing dispute with Steven Roth’s Vornado Realty Trust, which owns the building and wants to demolish it and construct a new tower. When pressed later on what would happen with the standoff, he scrunched up his face and mischievously said: “Who knows? I cannot predict the future. … I have no clue. I truly do not know what will happen.” Then after further reflection, he said, “No one would say real estate in New York is not a competitive field.”
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