background: The Flatiron building, at 175 Fifth Avenue on Broadway and 22nd Street, is one of the well-known icons of New York City and the island of Manhattan in particular. It was inaugurated in 1902, and about 90 years ago – during the years of the great economic depression – it was sold for the last time, for 100 thousand dollars. It was recently sold for 190 million dollars, to a relatively unknown buyer, at a price that to many seems higher than its true value. And all this is just the beginning of the story, apparently.
The Flatiron Building is so named because of its shape, reminiscent of an iron. It is built in the shape of a thin and tall triangle, and reaches a height of 87 meters (22 floors), including approximately 23.7 thousand square meters of built-up area. Until June 2019, it was almost fully rented to the British book publisher Macmillan, and since then it has been empty.
The conflicts: Against the background of the obsolescence of the building, conflicts between its various owners began to surface. “The conflicts between the owners reached the point of dividing it into five separate properties,” says Mor Ziv, director of the investment department at the real estate and investment management company JLL Israel. “The story turned into mutual lawsuits, and the court ruled that the building will be put up for auction.”
The auction: “The sale itself, which took place last week, was iconic in itself,” says Ziv. “It was done on the steps of the court itself, for 45 minutes, and dozens of real estate agents and brokers were standing around.”
Two came to the last line: GFP Real Estate, one of the main owners of the building until its sale, and a relatively unknown bidder named Jacob Garlick. It was the lesser-known name that won the jackpot – after offering 190 million dollars for the famous building.
The buyer: Garlick, in his 30s, serves as a managing partner at the Abraham Trust, a private investment fund that also focuses on real estate, among other things. However, as far as New York real estate professionals are concerned, he is something of a mystery: no one knows what moves, if In general, he has performed to this day in this field, and the attempts to understand what he plans to do with the building he just won, have also come to naught.
The question marks grew when it became clear that Garlick did not meet the obligation that was derived from the very winning: depositing 10% of the winning amount, i.e. 19 million dollars, until last Friday. The meaning, apparently, is that the second bidder, the GFP company, which was one of the owners of the building, is now the winner, but it is not certain that this will happen.
What in the future: “According to all the signs, GFP will waive this right,” says Ziv, “so the chances are increasing that another auction will be held. On the other hand, it is not impossible that the court will grant a certain extension to Garlick to complete the purchase himself.”
Another round of sales may point to what many have been saying since Garlick was announced as the winner: this is a higher price than the actual value of the building, certainly considering that it has been empty for several years, and in the reality that today it is very difficult to occupy office buildings.
Real estate experts estimate that the renovation works of the building will amount to about 100 million dollars. On the other hand, it is a real estate and New York icon, so it may be used for its owners mainly as a status symbol, and not necessarily as a yielding asset in the simple sense of the word. Another vision for the time.