Oct. 9 (Bloomberg) --A group including New York property investor Sharif El-Gamal agreed to buy the Manhattan building that houses the fashion program at the Parsons art and design school, home to television’s “Project Runway.”
El-Gamal’s Soho Properties LLC, developer of the controversial Islamic center north of lower Manhattan’s World Trade Center site, joined with Norman Sturner’s Murray Hill Properties in a deal to buy 560 Seventh Ave., the company said in an e-mailed statement. Parsons, part of the New School, said earlier this year that it would sell the building and move the fashion program to its Greenwich Village campus.
The property, located just south of Times Square at West 40th Street, will most likely be redeveloped as “a vibrant blend of hotel and retail spaces,” said Hank Sheinkopf, a Soho Properties spokesman. Prices for such buildings in the area have surged since the end of the last recession as real estate investors look to profit from the tourist destination.
“This transaction confirms the fact that Times Square proper is expanding both to the south and west,” said Robert Knakal, chairman of Massey Knakal Realty Services, which brokered the sale on behalf of the New School. The deal “is indicative of a rapidly appreciating land market in Manhattan’s most prime locations.”
Soho and Murray Hill paid about $61 million for the property, said two people with knowledge of the transaction, who asked not to be identified because the details are private.
Retail buildings in the Times Square area fetch about $1,600 a square foot, compared with $677 in 2009, according to Real Capital Analytics Inc., a New York-based real estate research firm. Hotels are valued at about $700,000 a room, well above their 2006 peak of $546,000, Ben Carlos Thypin, Real Capital’s director of market analysis, said in an e-mail.
With potential zoning bonuses, the Parsons site can support a 130,000-square-foot (12,000-square-meter) building, Knakal said.
The area surrounding Times Square, ranked in 2011 as the world’s most visited tourist attraction by Travel & Leisure Magazine, commands retail rents that are higher than any submarket in Manhattan except for the 10 blocks south of Central Park along Fifth Avenue, according to Cushman & Wakefield Inc. Ground-floor asking rents averaged $2,230 in the third quarter, 11 percent more than a year earlier.
The Parsons fashion building is about half a mile south of 701 Seventh Ave., where developers including Steven Witkoff and Michael Ashner are building a 465-room hotel and 85,000-square-foot retail complex, which will include a 24,000-square-foot light-emitting diode sign that would be among the biggest in Times Square.
Parsons is expanding its downtown campus with a new University Center, at Fifth Avenue and West 14th Street. The 350,000-square-foot complex, designed by architectural firm Skidmore Owings & Merrill, is scheduled to open in January, according to a school statement from February.
Deborah Kirschner, a New School spokeswoman, declined to comment on the Times Square building’s sale.
“Project Runway,” the fashion-design competition show that’s hosted by model Heidi Klum, films at the building. The school negotiates on a season-by-season basis with Project Runway’s producers on their space needs, and the next season’s filming schedule isn’t yet determined, Kirschner said.
Tim Gunn, who stars as a mentor for the show’s competing designers, was the Parsons chairman of fashion design when “Project Runway” started in 2004. A phone message left with a receptionist at Van Nuys, California-based Bunim-Murray Productions, the show’s producer, wasn’t returned.
The building also includes a local synagogue, Garment Center Congregation, which has a long-term lease on its space. The developers intend to refurbish the space for the congregation, Soho’s Sheinkopf said in the statement.
“Sharif believes this project can be a model for developments that embrace both cultural and commercial purposes, which ultimately will lead to more vibrant and diverse communities,” he said.
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