Trammell Crowe Buys Soho Ground Lease from Carolwood, Stellar

Trammell Crowe just picked up a development site in a rezoned section of Soho that is being closely watched by the industry and city planners.

The international real estate giant, which has $31 billion in projects in the works, paid $14.7 million for a 99-year ground lease at 126 Lafayette Street from a joint venture of Carolwood and Stellar Management.

The sale closed Monday, according to a source with direct knowledge of the deal. JLL’s Brendan Maddigan represented the sellers.

Carolwood, run by Adam Rubin and Andrew Shanfeld, and Stellar, run by the Gluck family, signed a lease for the land in August 2021, when the Soho rezoning was in public review but not assured of passing.

The new zoning was approved later that year, changing the parcel’s allowed use from commercial to residential and increasing the floor-area ratio to allow 87,000 square feet of apartments.

That paves the way for Trammell Crowe to build 27 stories and 100 to 115 rental units. The firm, which declined to comment, apparently believes the new building would fetch high enough rents to pencil out under the state’s new 485x regime.

The property tax break at the 6,300-square-foot Soho site would run for 35 years but require a minimum construction wage of $40 an hour if the project has at least 100 units, or $72.45 an hour for 150 units or more. That provision has resulted in a slew of filings for projects of 99 units or smaller.

Few projects are underway in the rezoned section of Soho, despite projections by city planners that the measure would yield 3,500 homes.

One reason for the lack of activity is that about three-quarters of the rezoned area is in a historic district, meaning the famously fastidious Landmarks Preservation Commission will insist that any work visible from the street is consistent with the historic architecture of Soho.

“Developers really don’t know how much they’re going to be allowed to build,” one commercial real estate broker said. But 126 Lafayette is not in the district and therefore is beyond Landmarks’ reach.

The ground, which has been owned by two families for many years, was not part of the deal. Some prospective buyers had inquired about buying the lease and land together. It is unclear if Trammell Crow is pursuing an acquisition of the land.

For Carolwood, the sale was logical because the firm specializes in office and retail, and does not do residential development. Stellar’s longtime head, Larry Gluck, died a year ago. His widow, Sandra Gluck, and eldest daughter, Amanda Gluck, remained active with the firm, whose managing partners are Adam Roman, Matthew Lembo and Ryan Jackson.

Their joint venture essentially made something out of almost nothing at 126 Lafayette. Carolwood and Stellar began negotiating the ground lease in the summer of 2020, when Covid was still gripping the city, and consummated it a year later. The joint venture also bought development rights from an adjacent parcel, 255 Canal Street, for $1.5 million, put down several million dollars as a security deposit and paid entitlement and soft costs. Property records list the transaction as a $7 million deal.

The $14.7 million it fetched for the lease largely represents the increase in the leasehold’s value since then, because of the rezoning and growing demand to live in Soho.