A recent temporary judicial decision has provided relief for 324 residents of Carnegie House, located at 100 W. 57th St., while also granting a reprieve for the building’s often overlooked commercial space. This retail area spans nearly 30,000 square feet along Sixth Avenue and is operated by Georgetown Company, which currently leases to ten different stores. Interestingly, Georgetown pays 25% of the ground rent for the property. If the proposed rent increase goes through, that figure could jump from $1.1 million to $6 million annually.
Any rent hike that Georgetown faces would, of course, be transferred onto the store tenants, which include everything from a small bike rental to a large two-level Duane Reade.
Just last week, an appellate panel unanimously rejected a proposed $24 million ground rent that had been approved by a lower court. This decision was made in light of misconduct by an arbitrator, referred to as an “umpire,” who neglected to disclose a job offer that had been extended to him by the lawyer representing the landowners.
Duane Reade occupies about 20,000 square feet at the corner of Sixth Avenue and West 57th Street. Other smaller tenants in the building include Fresh & Co., Zibetto Espresso Bar, a dry cleaner, and a souvenir shop.
In terms of ground rent distribution, 65% comes from the residents, 25% from the retail condo, and the remaining 10% from an in-house garage.
The land is owned by a partnership that includes tech figure Michael Dell alongside real estate investors Rubin Schron and David Werner. A spokesperson for the group, James Yolles, expressed confidence after the appellate decision, stating, “The tenants — largely investors — can seek all the delays they want, but the numbers are the numbers, and we trust that the next arbitrator will reach the same conclusion.”
Attempts by Georgetown’s representatives to provide comment through phone calls and email have so far gone unanswered.
Richard Hirsch, the president of the co-op board, described the appellate court’s ruling as a “critical victory” for residents, though he was careful to note that it serves only as a “temporary stopgap.”
Some in the community were reportedly surprised that the arbitrator’s error led to the dismissal of the entire $24.6 million award.
Scotty Sheriff, a resident and lawyer with experience in real estate matters, reflected on this saying, “I realized early on that, as an attorney, it’s essential not just to avoid wrongdoing but even the slightest appearance of it.” He admitted feeling discomfort upon hearing about the misconduct.
