June 22 (Bloomberg) -- Toll Brothers Inc., the largest U.S. luxury homebuilder, bid $35.5 million to win a bankruptcy auction for a vacant lot in Manhattan’s Gramercy Park area, where it plans to build a condominium tower.
The company plans to develop about 80 condos with ground- floor retail on the site at East 22nd Street and Third Avenue, said David Von Spreckelsen, president of the Horsham, Pennsylvania-based builder’s City Living division.
The cost for the site, authorized for 105,000 square feet (9,800 square meters) of construction, is $338 per buildable square foot, Von Spreckelsen said. It will take at least nine months to design the project and gain approvals before construction can begin, he said.
The land, formerly owned by Kaish & Taub Development Group, was repossessed by the lender, a division of UBS AG, Switzerland’s largest bank, Von Spreckelsen said. About “a half dozen” bidders participated in the auction, Von Spreckelsen said.
Manhattan condos sold for an average $1,216 a square foot in the first quarter, up 5.4 percent from a year earlier, according to appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. In the neighborhood that includes Gramercy Park and Union Square, the average condo price was $1,211 per square foot.
“I’d expect newly developed condos to cost more,” Jonathan Miller, president of Miller Samuel, said in a telephone interview today.
Toll Brothers’ City Living division, which has built condos in the New York area for seven years, accounts for about 15 percent of the company’s business and “is the best performer of any segment,” Chief Executive Officer Douglas Yearley Jr. said.
“It’s a much more risky business than building houses one at a time in the farm field,” Yearley said at a June 16 investor conference in New York. “Once you start that 40-story tower, you can’t get halfway up in a bad market and stop.”
The Gramercy Park purchase was reported earlier today by Dow Jones Newswires and the Real Deal Online.
--Editors: Daniel Taub, Josh Friedman
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