Sharif El-Gamal, MHP Real Estate Services and Hampshire Hotels Management, the developers of the Dream Hotel near Time Square, are planning on buying air rights from an untapped property in the Theater District that would ramp up the project’s total density by about 20 percent.
The development team is buying 19,772 square feet of air rights for its planned 237-key hotel at 560 Seventh Avenue from the Neil Simon Theater almost 10 blocks to the north, according to an application filed with the City Planning Department.
Representatives for the developers declined to comment, but a source familiar with the project said the per-square-foot price would be similar to the $300 per foot that Algin Management paid last year to buy 60,000 square feet of air rights from the Shubert Organization for its 59-story condo tower planned on the site of the former Roseland Ballroom. That would value the deal at about $6 million.
The Neil Simon Theater, landmarked in 1985, has never before sold any of its air rights, which total about 98,000 square feet. The theater’s owner is the Nederlander Organization, the Theater District’s second-largest landlord behind the Shubert Organization.
In an attempt to preserve the entertainment industry in the Theater District, the city created special zoning rules in 1998 that allow owners of certain “legitimate” (read: no peep show joints) properties to sell their rights to receiving sites further away than the limits imposed elsewhere in the city.
In the past seven years, the Shubert Organization has reaped more than $50 million from its air rights, money it has invested in several bank branches as well as McDonald’s and KFCs in suburban locations.
El-Gamal was represented by James Tamborlane of MHP Real Estate Services and Neederlander was represented in-house.