Gary Barnett has finally gotten his hands on the one piece of land that kept slipping away. Extell Development has bought a four-story building at 1645 First Avenue from Jay and Stuart Podolsky, closing out a standoff that stretched back more than a decade and sat squarely in the middle of Barnett's Yorkville development site.
The deal was reported Wednesday, with Crain's New York Business putting the price at $28 million, while Commercial Observer reported a slightly different figure of $27.9 million for the same transaction. Either way, it marks the end of a fight Crain's says involved owners who resisted offers for years. As The Real Deal reports, the building sat right in the middle of Barnett's development site, making it an unavoidable obstacle for years.
The property itself carries an unusual history. The Real Deal describes it as a four-story, 36-unit building that was formerly used as a homeless shelter, while an earlier account from the same outlet had described the structure as a four-story, 6,000-square-foot building that once served as a family homeless shelter. It sits on First Avenue between East 85th and East 86th streets in Yorkville, on Manhattan's Upper East Side, according to Commercial Observer.
A Decade-Long Assemblage Finally Complete
Extell has been piecing together the surrounding blocks since 2014, per The Real Deal's reporting, spending more than $77 million on nine separate lots and nearly $5 million more on an easement and air rights along the way. The Podolsky parcel was the holdout that kept the puzzle from closing.
Barnett himself downplayed the significance of finally landing the piece, telling The Real Deal, “it's just a regular deal, no big deal.” He added that Extell had now completed the whole site but said he had not yet decided what to do next with it — leaving the project's future genuinely open.
That uncertainty is notable given how much Extell has already put on paper. In November 2021, the company filed plans for a 22-story, L-shaped building on the site, according to The Real Deal. Reports on the unit count from that filing diverge: The Real Deal cited 543 apartments and commercial space, Commercial Observer put the 2021 filing at 542 units, and New York YIMBY reported the building was planned to include 459 market-rate and affordable units with ground-floor retail. Commercial Observer notes that Extell declined to comment on its plans for the newly acquired property, so it remains unclear which, if any, of those earlier proposals will move forward.
Years of Resistance From the Podolsky Brothers
The Podolskys were anything but easy negotiating partners. Barnett told The Real Deal in 2021 that Extell had offered the brothers at least five times what their property was worth, and that as of that year they had shown little interest in selling. He also faced a separate battle that year to remove a rent-stabilized tenant from one of the other remaining buildings on the site.
The brothers' history includes a guilty plea in the 1980s to harassing low-income renters, and they were separately accused of cheating on taxes for apartments they had rented to the city, according to The Real Deal's reporting. In 2017, they hired Frank Carone to represent them, and he went on to negotiate on their behalf in $173 million cluster site sales talks with the city administration at the time.
A Pattern Playing Out Across First Avenue
The Podolsky deal is not Extell's only First Avenue project nearby. The company is also developing a 30-story, 400,000-square-foot building on First Avenue between East 79th and 80th streets, The Real Deal reports. And holdouts remain a recurring theme for Extell along the corridor: East Side Feed reported that Greg Marshall, a longtime tenant of a low-rise building at 86th Street and First Avenue, said he was not planning on going anywhere, resisting Extell's buyout efforts there.
Extell's appetite for small parcels near its Yorkville site goes back further still. In 2018, the company paid $16 million for 1637 First Avenue, a four-story, 16-unit building it bought from the Hakim Organization, according to The Real Deal. With the Podolsky building finally in hand, Extell has cleared its last major obstacle on First Avenue — even if Barnett isn't yet saying what comes next.
