The iconic Flatiron Building in New York City will go up for auction this week in a bid to finally settle a bitter dispute between its four owners.
A state supreme judge ruled a sale could move forward after the current landlords failed to resolve their long-standing disagreements over renovations at the property.
The 121-year-old landmarked building has been empty since MacMillan Publishers, which occupied all 21 floors, moved out in 2019.
It will go up for sale at Mannion Auctions on Wednesday, March 22 and the current owners can put forward offers in the form of a ‘credit bid’ using their existing stake.
The iconic Flatiron Building in New York City will go up for auction later this month in a bid to finally settle a bitter dispute between its four owners
Jeffrey Gural (pictured) is chairman of GFP Real Estate which owns a share in the historic building alongside, Sorgente Group, ABS Real Estate Partners and Nathan Silverstein
Sorgente Group, Jeffrey Gural’s GFP Real Estate and ABS Real Estate Partners together own 75 per cent of the building at 175 Fifth Avenue – which was acquired in transactions between 1997 and 2004.
They sued their partner Nathan Silverstein, who owns the other 25 per cent, in 2021 to force a partition sale of their stakes and argued his business decisions kept the building empty.
The dispute began in 2017 shortly after MacMillan Publishers, which had occupied the building for almost 60 years, announced it would be moving out in 2019.
They were lured by cheaper rents downtown and the opportunity to work in a modern workplace and they moved into the renovated floors of the Equitable Building on Lower Broadway.
‘We’re not going to sell the building, we’re just looking to dissolve the partnership,’ GFP Real Estate Chairman Gural told Hyperallergic.
‘Our plan is hopefully to maintain ownership. We’re going to bid for the 25 percent.’
While Silverstein said it was ‘unfortunate’ the parties couldn’t agree on the building’s future.
‘It’s a shame, there’s no reason for it,’ he said. ‘Jeff Gural didn’t want to give up his control over the financial aspect. He wanted to spend what he saw as a substantial amount of money. It’s different viewpoints with people who evidently get upset too quickly.’
In an affidavit, Gural said: ‘We have tried for years to work out these differences with Mr. Silverstein, but the defendant has delayed, resisted and ultimately refused to agree with plaintiffs’ proposed business plan.’
He said Silverstein’s ideas were ‘preposterous’ and that he wanted no upgrades to be done between MacMillan Publishers’ exit and the new tenants.
And he added that the upgrades were required for fire safety purposes and to legally re-rent the structure.
Silverstein is also alleged to have proposed physically dividing the building into separate properties despite it being landmarked.
Gural added: ‘It boggles the mind to suggest that we could nevertheless agree on a plan to physically divide this building into five smaller, independent properties, none of which would be marketable — and then agree on a plan as to how that work would be financed.’
The 121-year-old skyscraper will now go up for sale at Mannion Auctions on March 22
The current owners can put forward offers in the form of a ‘credit bid’ using their existing stake
While Silverstein claimed Newmark never marketed the property despite being given advance notice of MacMillan Publishers leaving.
And he said Gural tried to rent the space to Knotel, which Newmark’s Barry Gosin has a significant stake in, for an ‘exceptionally low cost per square foot’ and a renewal period close to 50 years.
‘The proposed rental agreement would have locked the property into an unprofitable lease for a long period of time,’ Silverstein said in an affidavit.
The building owners eventually decided to proceed with an $80million renovation of the building, which has been covered in scaffolding since 2019, for new elevators, an updated lobby and a façade restoration.
However, Silverstein alleged that Gural had inflated the construction costs and claimed he could source ‘very high-quality marble’ at a fraction of the price that was paid.
The Flatiron’s interior did not match up with the building’s powerful presence and its water-powered elevators were famously slow and leaky. It often took several minutes to ascend from the lobby to the top offices.
It was built in 1902 to serve as office for the George A. Fuller Company, a major Chicago contracting firm and its odd triangular shape made it one of the most popular in the city.
The architect in charge opted for the distinctive triangular shape to maximize its footprint on the narrow piece of land it sits on and the property is said to have got its famous name from its resemblance to 20th century clothing irons.
The Flatiron Building is considered one of New York’s most revered early skyscrapers and was declared a city landmark in 1966.
