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  • Writer's pictureAndre Watson

Gramercy Park co-op building hits market for $50M amid legal fight

Sale could result in luxury condo conversion despite air rights dispute

38 Gramercy Park North and Victor Sigoura of Legion Investment Group (Apartments, Getty)

An entire building in the rarified air of Gramercy Park has hit the market for $50 million — keys included.

The 38-unit co-op at 38 Gramercy Park North, at the northeast corner of park and East 21st Street, spans 21,400 square feet and comes with 9,750 square feet of additional development rights. The building could be converted to condos or a single-family mansion.

“The property offers keys to Gramercy Park, corner exposure with unobstructed park views, and a blank canvas for an iconic development,” said Zachary Redding of Colliers, which the building’s co-op board retained to market the property.

The building may also unlock a prize for a group of investors who aim to use the co-op’s air rights for a condo project next door.

An affiliate of Victor Sigoura’s Legion Investment Group, which has assembled four parcels abutting the co-op with frontage along Third Avenue, wants to build an approximately 20-story condo building, according to a May newsletter from the co-op board to shareholders.

As a result of Legion’s condo project, “a cantilever would be constructed approximately 15 feet over the northeast portion of our building,” the letter from the co-op board reads. To build the cantilever, Legion negotiated with the board to buy 11,800 square feet of air rights — separate from the 9,750 square feet offered with the building itself — for $4.1 million.

As part of the air rights agreement, the Legion affiliate would pay $10,000 a month to lease the commercial space at 38 Gramercy for three years as a construction office for its Third Avenue condo project.

So enthusiastic was the co-op board, it agreed to sell the building’s air rights days before its annual shareholders meeting in June. One of the building’s residents was less enthusiastic.

Shareholder Joseph Cogan, whose background is in real estate equity management, sued the co-op board and developers of the adjacent project in September, accusing the board of “concealing material information from shareholders about the [air rights] transaction,” and allowing the developer to “bulk up” its adjoining building and “entomb 38 Gramercy with a cantilever.”

A lawyer for the co-op board argued that the board was acting within its rights to represent the corporation in business transactions. Remarking on the price that the Legion affiliate agreed to pay for the air rights, the attorney called it a “once in a generation offer.”

But Cogan’s lawsuit contends that no formal valuation or appraisal was done to determine the market value of the air rights. Cogan wants a judge to invalidate the agreement and award damages to the co-op for the board’s alleged breach of fiduciary duty.

Legion did not return a request for comment. People familiar with the sale of the building said an offer was expected in a week or two, after which the co-op board would hold a shareholder vote. A sale of the building would require the consent of two-thirds of shareholders.

Whatever the outcome of Cogan’s lawsuit or the proposed sale of the building, property in the area is likely to fetch top dollar — a prospect that the building’s shareholders, most of whom paid less than $1 million for their apartments, may smile upon.

Midtown South is one of Manhattan’s strongest condo markets, representing 29 percent of the borough’s new development sales from June 2021 to June 2022, according to Colliers.

The median sale price in the submarket rose 10 percent during that same period, according to Colliers, which cited the brokerage Serhant for the figure.

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