Commercial Market Spawns Crazy Soho Building Sale—$1,000 a Foot!

032607 article breaks3 Commercial Market Spawns Crazy  Soho Building Sale—$1,000 a Foot!A very glam downtown project now has a very glam team to sell it.

The mad marketing genius Michael Shvo is partnering with developer Joseph Moinian to market a planned W Hotel at 123 Washington Street, a source said. Mr. Shvo is expected to market the condominium portion of Mr. Moinian’s condo-hotel.

The brash Mr. Shvo, who made himself famous with sleek marketing for 20 Pine Street and the Bryant Park Tower, revels in a clean and polished style. His marketing peddles to a certain audience—not quite trust-fund kids, but a group, say, that spends its weekend nights flooding the meatpacking district.

Mr. Shvo advertises on his Web site that he’s worked with the Moinian Group before, but this is surely their biggest project together. And now their partnership will decide the success of W’s first splash below 14th Street.

The high-end brand will have company in the once-maligned financial district.

Tiffany & Co., Hermès and Thomas Pink will all open stores there soon. And though a spokesman said no decision has been made, The Real Deal magazine reported last week that Larry Silverstein is converting his 99 Church Street into an enormous 60-story condo-hotel.

IF THERE’S A MAJOR BUILDING SALE, YOU EXPECT it to happen in a part of Manhattan where there are big skyscrapers with high-powered tenants.

But in this muscular real-estate market, a watershed sale can apparently come in the form of a petite, six-story Soho building whose main tenant is Pottery Barn.

A building at the corner of Broadway and Houston, 600 Broadway, is in contract for more than $1,000 per foot at $71 million, a source said.

The sale price per square foot for this 65,000-square-foot building is in an elite territory generally reserved for the highest premium buildings in midtown—a 666 Fifth Avenue or an 825 Eighth Avenue, say.

So what perks does this building have, other than the hordes of weekend shoppers outside it that make crossing Broadway and Houston so daunting?

Well, it sold for exactly that reason: Prime retail rents were the sale’s driving force. Asking rents for ground-floor space on Broadway (in Soho) average $282 per foot, and can go as high as $400 a foot, according to Cushman & Wakefield.

The 123-year-old brick-built 600 Broadway is also recognizable to New Yorkers: It has the DKNY mural on its side, the one that’s been there since 1989.

The new buyer is a group of investors led by Alex Adjmi. The seller is Enterprise Asset Management.

According to city records, Enterprise purchased the building in January for $21 million (well, that’s quite a flip). But two sources said the new sale price was for an amount closer to $40 million.

Though the building is in contract, it is not expected to close for at least another year, a source said. The reason is unclear.

Pottery Barn’s lease runs through 2012, but expect major rent increases when that lease ends or a new and bigger name takes its place, since Mr. Adjmi will certainly look for reasons to justify this large sale price.

Readers of Commercial Breaks have seen head-scratching building sales like this before. When the 90-year-old Rodin Studios, at 200 West 57th Street, sold for $126 million, at more than $1,000 per foot, it was all due to its proximity to Columbus Circle and the big retail money it can command.

But is $1,000 per foot the new standard for Soho? Last June, 131-137 Spring Street sold for $46 million, at $814 per square foot. Those buildings’ retail tenants are Burberry and Diesel.

The Fantastic Four capital-markets team at Cushman & Wakefield—Richard Baxter, Ron Cohen, Jon Caplan and Scott Latham—brokered the 600 Broadway deal. They declined to be interviewed for this story.

THIS IS QUITE A SHOWDOWN: Donald Trump versus Vornado’s Steve Roth in the heavyweight real-estate legal battle of the 21st century.

Well, sort of.

Last week, Mr. Roth announced that he’s buying, for $1.8 billion, a 70 percent stake in 1290 Avenue of the Americas and a San Francisco office building from a group of Hong Kong investors, Hudson Waterfront Associates. Mr. Trump will retain a 30 percent share in the buildings.

But as part of the agreement, Mr. Roth will have to get involved with the lawsuits that Mr. Trump has filed against those Hong Kong investors, his one-time partners in a riverside development site on the Upper West Side.

In 2005, Hudson Waterfront Associates sold the development for $1.7 billion. Mr. Trump was part owner of the site.

Mr. Trump complained that his partners didn’t get enough money for it, so he did what he often does: He sued them. This didn’t entirely work—all of the lawsuits have been dismissed except one.

So now the interesting part! Mr. Roth paid a below-market rate for 1290 Avenue of the Americas, at $775 per square foot. The reason? As part of the deal with Hudson Waterfront Associates, Mr. Roth will indemnify the investors—or, in other words, he’ll foot all the bills for any further lawsuit that Mr. Trump pushes against them.

So if they go to court, it’s a showdown of Mr. Trump’s money versus Mr. Roth’s money.

Mr. Trump seems determined, too. In the New York Post on Saturday, he commended Mr. Roth on getting a good deal, but added, “Our lawsuit will be successful.”

But it’s not all bad for Mr. Roth. The Hong Kong investors will have to reimburse Mr. Roth if Mr. Trump is successful with any lawsuit regarding disputes over their partnership, according to a document filed with the Securities and Exchange Commission.

But if Mr. Trump wins any other claims in an appeal, or pushes this further, that’s only more billing hours Mr. Roth will have to cough up to pay for this lawsuit.