Broadway Oxygen Sells For $450 Per Square Foot In Nederlander Deal

The mammoth Dream Hotel project underway at the border of the Broadway theater district and the Garment Center just got a little mammother with an expensive infusion of Nederlander Organization air. Translation: Nederlander, Deadline has confirmed, has sold just shy of 20,000 square feet of air above the Neil Simon Theatre for $8.9 million to a consortium that’s developing a mixed-use building  at 560 Seventh Avenue, between 40th and 41st Streets.

That’s $450 per square foot — more than double the going price just two years ago The deal will allow Soho Properties, MHP Real Estate Services and Hampshire Hotels Group to bring the planned 238-key, $300-million hotel to 29 stories almost 400 feet high.

This transaction is the latest dish in a bonanza that Broadway’s big landlords are enjoying as they sell off the unusable space above their landmarked theaters. A zoning-law break allows developers to transfer those rights elsewhere. (The Neil Simon, for example, is 10 blocks north of the Dream Hotel site.) As Deadline reported earlier, a tower planned for 740 Eighth Avenue by Extell Development (the Gary Barnett-owned company behind One57, the so-called billionaire’s building on West 57th Street near Carnegie Hall) has metastasized with a major assist from the Shubert Organization. Shubert, whose 17 New York theaters make it Broadway’s biggest landlord, sold off a combination of air rights and property it owns adjacent to the site, between 45th and 46th streets. Demolition is set to begin shortly on a shuttered  garage at the eastern edge of the site.

Demolition of the Dream Hotel site will begin in the next few months. The current building, where Project Runway was once filmed, was most recently home to the Garment Center Congregation, an Orthodox Jewish congregation that has temporarily moved to quarters nearby but will eventually occupy a below-street-level floor in the new building. Plans also call for a restaurant and retail space in the building, which was purchased from Parsons The New School for Design in April 2014 for $62.3 million. The Neil Simon air rights deal was first reported in the Commercial Observer.

Speaking of Shubert, the organization’s 499-seat Little Shubert Theatre, largely underused since opening in 2002, has a new name and an actual tenant: It is now called Stage 42, to make its name consistent with Stages 1 through 5 at the Shubert-owned New World Stages complex on West 50th Street and Eighth Avenue (where Avenue Q is running). Trip Of Love, a  ’60s-era jukebox musical, is slated to begin performances there on September 26. Perhaps Stages 6-41 will find a home within Extell’s long shadow.