Burris buys the dirt under a Lexington Avenue corner

David Burris of Terra Holdings and a group of investors paid $28.1 million for three low-lying pre-war buildings at the corner of Lexington Avenue and East 61st Street, an assemblage of 11 retail units and eight apartments totaling about 16,244 square feet. The deal, made through the entity 780 Lex Realty Associates and reported by Commercial Observer as a covered land play, closed as three separate transactions in late August.

At roughly $1,730 a square foot, the basis reads as a ground position rather than a going concern, and the buildings bear that out: a Lexington Avenue corner pays for location, not for what its low-rise rent roll collects. Chris Varjan of Lee & Associates NYC, whose team with Peter Braus, James Wacht and George Steffani represented both sides, called the buyer's position “long-term, patient capital” and said the aim was “to get control of the whole blockfront along Lexington, which is not something you can often do.”

The seller was the family of the late Robert Siegel, which had owned the site for more than 50 years, and what the new owners inherit is a corner with two dark storefronts: Sprinkles Cupcakes closed its final location at 780 Lexington Avenue late last year, and the space at 782 that a smoke shop once occupied is vacant. Peppino Tailors, Orva Shoes, Retail Therapy, Elite Barbers NYC and Suzanne Couture Millinery remain, but there are no immediate redevelopment plans, though Varjan said the buyers intend to reposition the retail.

The purchase is not connected to Terra or its subsidiary Brown Harris Stevens, but Terra owns the 20-story office building next door at 770 Lexington Avenue, which leaves this corner beside a tower owned by the firm the buyer comes from. Adjacent land is likely worth more to the owner next door than to a rival bidder, which is why such positions tend to be assembled through an entity rather than a corporate balance sheet.

With no immediate redevelopment plans and therefore no construction carry to finance or clock to beat, the two vacant storefronts are the only variable that can move the near-term return on what Burris bought: mostly ground. Patience is the word for both legs of the logic: it is what this publication read into Slate's $245 million permanent loan to Terra, and it is how Varjan describes the money now parked on this corner. A pair of signed retail leases would make the ground beneath them look cheap. That, not any redevelopment plan, is what this trade is waiting on.