Josh Zegen’s Madison Realty Capital has run into some major problems while building a luxury condominium development on a vacant Fifth Avenue site in Greenwich Village.
The project at 16 Fifth Avenue has stalled after the 14-unit building at 10 Fifth Avenue began cracking, forcing the tenants to relocate, the New York Post reported.
Madison Realty bought the two lots on which the project — a 19-story, 14-condo-unit building — is being developed in 2015 for $27.5 million, the outlet said.
The company demolished the two rowhouses — which had 20 total units, including about 10 rent-regulated ones — on the lots located in the Greenwich Village Historic District.
Normally that’s the tough part, as the demo likely required emptying out the two buildings, which would mean buying out tenants, the Post said citing Andrew Berman, who led a group to try to save the buildings.
But after Madison Realty managed to accomplish that feat, it ran into even more significant issues in December 2022 as it began excavating the newly vacant lots, with tenants at 10 Fifth Avenue saying their units were showing cracks.
“The corner of a wall was separating and you could feel a draft,” one tenant said, according to the Post.
The situation worsened to the exterior, with tenants ultimately being forced to relocate within two hours on Feb. 18 after chunks of the building began falling off, the Post said.
“An approximately 3-inch separation had formed at the fifth floor level” between 10 Fifth and its neighbor at 12 Fifth, Department of Buildings spokesman Andrew Rudansky told the Post.
Temporary shoring has been installed to stabilize 10 Fifth, the outlet said.
“The way they treated us is egregious, callous and irresponsible,” a tenant told the Post. “We warned them back in December and they didn’t put shoring in until we were evacuated.”
Madison Realty paid for hotels for the first 10 days of the tenants’ displacement. However tenants of 10 Fifth have since scrambled to find other housing as they await the building’s fate.
“We are working closely with DOB and LPC to ensure the safety of the construction site, and to that end, have received permission to restart certain remediation efforts. We look forward to further identifying effective solutions that ensure the safety of the site and completing construction at 16 Fifth Avenue,” Madison Realty said in a statement to the Post.
Madison Realty, which is run by Zegen, Brian Shatz and Adam Tantleff; is known for its aggressive approach. The company developed its reputation as a special-situations lender, bankrolling challenging deals and providing rescue financing for some of New York’s scrappiest builders.
— Ted Glanzer