Midtown dorm deal revitalizes local college

Real Estate Weekly, March 29, 2000 by Lois Weiss

A unique partnership will provide 500 desperately needed dorm rooms for Marymount Manhattan College students while netting developer Arun Bhatia 42 luxury residences on the upper 15 floors of a new, 46-story Midtown high rise.

The mid-block project on 55th Street, to be constructed just east of 919 Third Avenue, was designed by noted architect Costas Kondylis. 'The building on top of a building' provides for entirely separate entrances, lobbies and elevators to serve the two uses of the 170,000 square-foot sliver.

Marymount Manhattan College will own its 70 percent, comprising 120,000 square feet, as a condominium interest.

When 231-235 East 55th Street is opened for occupancy in the fall of 2001, it will provide Marymount with a long-term solution for the students who have been housed in four different locations in three boroughs. Currently, students live at the St. George in Brooklyn, on Roosevelt Island, at the 92nd Street Y and in another Manhattan location.

The urban school itself is located at 221 East 71st Street and serves a diverse student body. Of its 2,500 students, President Regina Peruggi said 45 percent are of African-American and Latino heritage, while their ages span from 18 to 75.

But over the last ten years, drawn by the resurgence and safety of New York City, its out of town population has swelled from 70 to 500. To accommodate them, the college has had to scramble for sleeping space and transportation, and contend with continuously rising rents.

President Peruggi said the new building is a great investment and will become an outstanding asset for the institution.

"The project did a lot for us," she said. The new dormitory will create an instant campus environment for the out-of-town students by grouping them in a stable, new building in a safe neighborhood close to the school.

Plus, the college administration won't have to contend with four different buildings, the varying ownership, payments, shuttle services and staffs.

The financing also converts "unstable rent payments and transforms them to stable debt service," Peruggi added.

Construction will be financed by a combination of the Dormitory Authority of the State of New York and private financing obtained by Bhatia.

The Dormitory Authority previously collaborated on a public/private construction for CUNY at the former B. Altman's site, but this is the first time it has done so for a residence project for an independent college.

The legal work was intricate and time consuming, the parties said, as all the various systems and parts of the building had to be covered within the financing and sales contracts.

But for Marymount, it took even longer to find the site. In 1997, a friend of the college introduced President Peruggi to developer Jack Rudin, who in turn introduced them to broker Joseph A. Grotto, chairman of Joseph A. Grotto & Associates.

"We had helped before on some sensitive matters and he had the faith and confidence that we could get the job done," said Grotto of the Rudin introduction.

But to fulfill his mission, he and his son, Joseph A. Grotto Jr., went on an exhausting search of dozens of sites over approximately 18 months. That's because the college's overtures were consistently shuffled aside when private developers stepped up to pay more.

"It was complicated by the obvious: they had no money to put down for a dormitory space, and the need was tremendous because the kids were spread off over various locations," said Grotto Sr. "They wanted to stay in Manhattan, and it would have been ducky to stay in walking distance."

The end result would also have to provide a student with a place to live for about $550 to $600 a month -- roughly $1,000 less than a current market studio apartment in a doorman building.

They nearly had a site on 42nd Street which would have integrated nicely with Marymount's main out-of-town draws: strong theater arts and communications programs. But it was lost to another developer.

Then Grotto called Robert I. Shapiro, a broker with City Center Real Estate who is often involved with distinctive but quiet deals that involve transferable development rights.

"For the college to survive, they needed the dormitory,." said Shapiro. "New York is a hot place to go to college. They don't want to go to a place with ivy growing on the wall -- they want a place where the arts are. Where is a theater program going to be, in the boondocks?"

Shapiro had worked with Bhatia on the development of The Strand at 500 West 43rd Street -- which was also designed by Kondylis -- and most recently on a midtown assemblage that was resold to a hotel group.

"He's a very savvy developer," observed Kondylis.

Since 1980, Bhatia has developed $319 million in new hi-rise cooperative and condominium buildings, and rehabilitated and sold over 1,000 units in New York. These include The Park East at 233 East 86th Street, and The Dunhill at 401 East 84th Street. He also rehabbed and rented 750 units in a landmarked Philadelphia tower.

Shapiro was familiar with the 55th Street site which Bhatia had assembled, hoping to create his own extended stay hotel. The site's C6-7 zoning allows such a project a 15 FAR -- 50 percent more building than what would be permitted for a straight residential use.