A development plot in Manhattan’s West Chelsea, which was conceptualised in 2019 by an international hotel company for a hotel and luxury residences, is now earmarked for a new purpose as a residential project. The Amsterdam-based PPHE Hotel Group sold the property at 538-542 West 29th Street to Brooklyn’s T&E Development for $33.5 million. The transaction was concluded late on Thursday afternoon, as reported by Commercial Observer.
Colliers represented the seller with a team led by Zach Redding, Dylan Kane and Jared King. Lenny Sporn of the Sporn Group arranged the sale on behalf of the buyer. Crain’s New York Business had previously reported that the deal was expected to close this summer.
In March 2019, the PPHE Hotel Group announced the formation of a joint venture with developer Largo to acquire the undeveloped plot for approximately $42 million. The plans included a 98-room hotel and 55 condominiums. A unit affiliated with PPHE applied for demolition permits for the project in late 2023, Crain’s reported at the time.
Greg Hegarty, Co-CEO of PPHE, stated in a February announcement regarding the impending sale that “significant changes in the regulatory environment” for hotel redevelopment projects in New York since the 2019 acquisition contributed to the decision to divest the property.
The 9,875-square-foot undeveloped plot between 10th and 11th Avenues offers development potential of 74,063 square feet under New York City’s C6-3 zoning within the Special West Chelsea District and, according to Colliers, will not require an affordable housing component. T&E Development recently completed a 54-unit residential project called “The Florian” at 350 East 18th Street in Manhattan’s Gramercy Park.
Zach Redding noted that this plot is one of the few remaining unrestricted development sites in West Chelsea and would be well positioned as a residential project. He pointed out that there is currently only one condominium building under construction between West 20th and West 30th Streets. Redding highlighted that nearby condominium projects have achieved average sales proceeds of approximately $2,884 per square foot and that prices in Chelsea have risen by 44 percent since 2020. This represents the largest five-year increase of all Manhattan submarkets.
Redding further explained that “cost and interest rate volatility have pushed almost every new New York project towards the ‘trophy buyers’, as sales prices exceeding $3,000 per foot can absorb unforeseen costs.” He added: “The deeper part of the market – buyers looking in the $2,000 to $2,700 range – remained underserved. If built as condominiums, this will be one of the few projects in three to four years that serves this segment.”
