With $57M in air rights, Rockrose moves ahead with Hudson Yards resi tower

Rendering credit Pelli Clarke Pelli Architects, map photo credit Google Earth. From left: Henry Elghanayan and Justin Elghanayan

Development bonuses were final purchases needed for 598-unit residential high-rise

By Adam Pincus

Privately held Manhattan-based Rockrose Development closed this month on the second and final package of air rights needed to build its planned 598-unit residential tower in Hudson Yards.

Rockrose needed the transferable development rights to move forward with the 565-foot-tall tower planned for 555 West 38th Street, at 11th Avenue.

The residential rental building is the first of two towers planned on land Rockrose began assembling in 2002, that together total 1.39 million square feet of development potential, city records show. The other is an approximately 1-million-square-foot office building that does not yet have plans filed.

Projects in Hudson Yards illustrate the powerful influence the city’s land use decisions have to promote development. This project and many others like it have doubled in size thanks to the fuel of transferable development rights.

The firm led by Henry Elghanayan and his son Justin, paid $20.5 million for 139,093 square feet of air rights from the Metropolitan Transportation Authority, in a deal that closed in January, city records show. The price was $147 per square foot.

Last July the firm paid $35.8 million to the Hudson Yards District Improvement Fund to acquire 278,186 square feet of development rights, at a price of $128.78 per foot, city records show.

Rockrose filed plans in September for the 403,842-square-foot residential tower. The high-rise has a building envelope of about 467,000 square feet, NYC Department of Buildings records show.

The building is being designed by Pelli Clark Pelli Architects, with SLCE Architects as the architect of record. The tower will have 16,000 square feet of tenant amenity space, according to the developer, including roof top terraces, a squash court and a golf simulator. The building will have 150 units affordable and the balance free market.

There are two sources from which developers may purchase air rights in Hudson Yards. One is the Eastern Rail Yard Transferable Development Rights from the MTA and the other is the Hudson Yards District Improvement Bonus, purchased through a payment to the city’s Hudson Yards District Improvement Fund.

The District Improvement Bonus development rights started at $100 per foot and are simply indexed to inflation. As of August the price was $132.51 per foot, but was slightly lower when Rockrose closed on the deal in the summer.

The Eastern Rail Yards rights are priced on a per square foot basis at 65 percent of the receiving site’s appraised value.

Rockrose began assembling the commercial portion of the site first, in 2002, with the $10.5 million purchase of the mid-block parcel 545 West 38th Street and 536 West 39th Street, from Meyers Parking System. The legendary brokerage owner Edward S. Gordon had co-owned the parking company before his death in 2000.

The next acquisition was 555 West 38th Street for $83 million in 2007, which is the site for the residential building. Rockrose then acquired 535 West 38th Street in 2012 for $27.5 million.

The total acquisition cost for the residential and commercial sites including air rights was $180 million, an analysis by PincusCo found.

CLICK HERE for Google Doc link to data used in this story.

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