‘Better Than Billionaires’ Row’? Why NYC’s Top Developers Are All-In On A Tiny Patch Of Madison Avenue

On just five blocks of Madison Avenue, a multibillion-dollar development battle is brewing.

Within a matter of months, Extell Development and Related Cos. have set in motion plans for ultra-luxury skyscrapers on the eastern corners of 60th and 59th streets. The developers are known to be aggressive, being responsible for shaping Billionaires’ Row and Hudson Yards, but their investments are just the start of the area’s rebirth.

“The Plaza District in general is in the midst of a $15B to $20B makeover when you total up all of the projects that are either recently completed, under development or proposed,” Eastdil Secured Managing Director Will Silverman said. “I think people have not really processed just how different this neighborhood is going to look in the not-too-distant future.”

This stretch of the iconic fashion strip between 57th and 61st streets — nestled between Fifth and Park avenues and a block from Central Park — today is dotted with construction workers hustling around the typical throngs of tourists lugging shopping bags and waiters taking smoke breaks.

Extell and Related might be the earliest, biggest movers, but they are far from alone. Across the avenue, Ashkenazy Acquisition Corp. is contemplating the future of the shuttered Barneys store, a Madison Avenue staple. A pension fund last month reportedly tapped Silverman’s team at Eastdil to market 590 Madison Ave. for $1.1B.

“The location is perfect,” Ariel Property Advisors President and founder Shimon Shkury said. “Actually, I personally think the location is probably better than Billionaires’ Row, in a way.”

Since Jan. 1, 2024, investors have dropped $1.6B across just 17 transactions in the Plaza District, defined as east of Sixth Avenue between 47th and 65th streets, according to data provided by Ariel Property Advisors. That accounted for nearly 10% of the entire $17.9B spent across Manhattan over that period, but less than 4% of total transactions.

The bidding war in the Plaza District was kicked off by luxury retailers on Fifth Avenue aiming to choke out competition and strengthen their brand dominance.

At the end of 2023, Prada shelled out $853M for two buildings at 720 and 724 Fifth Ave., and Kering, the parent company of Gucci and Balenciaga, splurged nearly $1B on 715-717 Fifth Ave. Rolex is also building a new 28-story headquarters and flagship at 665 Fifth, and Chanel and LVMH are reportedly going head-to-head in negotiations for 745 Fifth.

And other sales are in the works. This week, Bloomberg reported that Naftali Group entered a contract to buy 800 Fifth Ave. for more than $800M, a price and buyer that suggest a luxury condo tower could be in the works.

On Madison Avenue’s eastern flank, titans of finance have piled into offices on Park Avenue, where availability is among the lowest in the world. JPMorgan Chase and Citadel are building new towers for themselves, and private equity juggernauts are battling for whatever top-end space is left, routinely paying more than $150 per SF.

Those investments in office and retail have consolidated New York City’s high net worth individuals into what is, more or less, a single 1,000-foot radius around one small section of Madison Avenue. The strip has seen its share of struggles and distress in recent years, but it is now poised to regain its status as an emblem of American corporate prestige and upscale sophistication — Mad Men was named for it, after all.

“The reason that the neighborhood has been getting so many investment dollars is part of a more global phenomenon that has to do with wealth concentration. The world has been making billionaires faster than it’s making the stuff they buy,” Silverman said. “Real estate in this neighborhood is one of those things.”

655 Madison Ave.

Starting in October, Gary Barnett’s Extell spent more than $260M to acquire the office building at 655 Madison and the adjacent buildings at 33-39 E. 60th St. The 200K SF tower is in the process of being razed, while demolition permits have been filed for four smaller buildings around the corner.

Holdover petitions to remove one resident and two restaurants, Il Mulino and Philippe Chow, were filed in civil court early last year, though a waiter at the upscale Chinese restaurant told Bisnow last week he had no knowledge — and a newfound fear — that a condo development could result in him losing his job.

But Barnett is known for his patience. The land and air rights for his two Billionaires’ Row supertalls, One57 and Central Park Tower, each took roughly a decade to piece together. This month, after another 10 years, he spent what he called a “stupid price,” $175M, on the holdout lot at 576 Fifth Ave. He will use it to build a blockwide office tower and Ikea superstore.

Extell didn’t respond to Bisnow’s request for comment but seems to be moving ahead on its Madison Avenue scheme. Plans filed before the purchases of 33-39 E. 60th describe a new 37-story mixed-use development with retail, office, hotel and residential.

Industry insiders speculate that the 37-story tower may not be the final vision.

“It’s not [Barnett’s] style. Based on analyzing work that he’s done for so long, that just doesn’t seem like what he does,” said Duane Burress, who specializes in land and air rights valuations.

A lawsuit filed this week has bolstered that hypothesis. The buyer of an $80M unit at 520 Park Ave. sued Zeckendorf Development, claiming that the penthouse was sold without warning that Extell has “secret plans” to build a skyscraper on Madison Avenue that “will tower over” and block the views of the existing 64-story building.

625 Madison Ave.

A block to the south, demolition crews donning gas masks are swarming the corner of 59th Street and Madison, where Related plans to erect a 68-story residential supertall. It is expected to yield 101 condo units, along with an array of amenities, restaurant space and two floors of retail.

“625 Madison Avenue holds a special place in Related’s history as our former corporate headquarters for nearly two decades,” a spokesperson for the firm told Bisnow in a statement. “We look forward to starting a new chapter for the building by delivering exceptional hospitality, luxury residences, and flagship retail in one of the most sought-after areas in New York City.”

The building, along with any residential units Extell builds, would be rare contributors to the Plaza District’s low housing stock and cater to the increasing number of high earners working on Park Avenue.

Expected to be completed in 2032, Citadel CEO Ken Griffin, Vornado and Rudin have begun the approval process for 350 Park Ave., an office tower where the hedge fund has already committed to 800K SF. That site is a 10-minute walk away from Related’s site, according to Google Maps. One Vanderbilt, a fully occupied, 1.7M SF office that opened in 2020, is less than 20 minutes away.

Newly constructed condos in the area surrounding the 57th-to-61st-street corridor have an average sellout of over $4,600 per SF. Certain developments, like the Aman Residences at 730 Fifth Ave., sell for as much as $8K per SF, according to market data analysis provided by Ariel Property Advisors. The last sponsor unit at the Aman sold for $66M in January.

“If I’m working at One Vanderbilt or 550 Madison, I probably can live [nearby] in a luxury apartment building,” Shkury said. “So, I work in the best building in the world with the best people in the world. I live in the best location in the world with all of the amenities I need.”

660 Madison Ave.

Contrasted with the pounding sounds of jackhammers, the former Barneys store at 660 Madison Ave. sits quiet. In the window of what was once a small salon, abandoned bottles of hair products remain on display, gathering dust.

The nine-story retail condo, owned by Ashkenazy, was vacated by the department chain in 2020. It was briefly occupied by a Louis Vuitton pop-up in 2022 but has otherwise remained empty. Still, the developer has clung to the space.

“Barneys is the best piece of real estate on Madison Avenue,” Ben Ashkenazy said last year. “I’ve chosen to keep it vacant for a reason, because one big retailer is going to buy it.”

That’s still a possibility, although Ashkenazy has new rivals vying for the same buyers. Extell is reportedly in negotiations with Chanel to sell the 65K SF retail base at 655 Madison for more than $400M, Commercial Observer reported earlier this month.

In 2020, it was reported that J. Safra Real Estate was emptying the office portion of 660 Madison to move forward on plans to convert the upper half into residential and hotel use. Permits for the project were originally filed in 2015.

But no permits for construction, aside from those for the sidewalk shed and small electrical fixes, have been filed in the last two years. Neither Safra nor Ashkenazy responded to Bisnow’s requests for comment.

An empty building could be the perfect opportunity to compete with Extell and Related — and Ashkenazy has some added motivation. He once owned the ground under 625 Madison Ave. Ashkenazy’s partner Michael Alpert previously called the land “absolutely one of the best development sites in Manhattan.”

But Ashkenazy lost the site to SL Green in August 2023 following a combative foreclosure process. Related paid $633M for the property a few months later.

Now, 660 Madison Ave. could go up against the new construction across the street, if Ashkenazy or another developer so chooses, insiders say. A new tower on the site may even be able to block views of 625 Madison, harming its value.

But even though Ashkenazy has investors to answer to, decisions on the building shouldn’t be rushed, especially with so much action happening around it, Burress said.

“When someone wants to buy a site, they are always concerned about what the next person is doing right there and down the block,” he said. “They don’t want to put something out there that no one’s going to want because this person already put it out.”

‘The Difference Between Place Vendôme and Siberia’

Other landlords have already begun upgrading their buildings to keep up with their neighbors. Scaffolding covers several storefronts on the strip, including the LVMH Tower at 21 E. 57th St., where the French fashion conglomerate is constructing a new seven-floor Dior flagship equipped with a spa.

Further down the avenue, Marx Realty has spent $24M to add a hotel-like lobby, club floor and library to its boutique office building at 545 Madison. It partnered with French crystal manufacturer Baccarat to brand the office.

Marx CEO Craig Deitelzweig said he has been able to increase rents by 30% by leaning in to luxury, and he expects demand to keep going up as a result of the new developments.

“Each project feeds off of the next project,” Deitelzweig said. “There’s more vibrancy, more people out on the streets, better restaurants, better retailers, better office tenants, more residential. All of that keeps happening.”

However, the range of that feedback loop, and those who benefit from it, only goes so far. With retailers and landlords snapping up prime sites, available inventory is rapidly dwindling.

“This is a rare case in real estate where you actually have an expansion of demand and a contraction of supply,” Silverman said. “A few dozen feet in the wrong direction and it’s the difference between Place Vendôme and Siberia.”

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