'Go west' Moinian tells land-hungry developers.

Speaking at a recent luncheon held by B'nai B'rith at the Cornelt Club, Joe Moinian outlined just how bad some development deals in the city have gotten.

In a recent offer he received that stood out for its comical elaborateness, Moinian described plans that were laid on his desk for a piece of land on the East Side with no views. Incredibly, despite its challenged location,, the plot was being marketed for $1000 psf, a price that not even a condo development could justify.

The solution? In the plans, Moinian explained, were blueprints for a grouping of 18-story concrete columns upon which a platform could be supported. On top of this unprecedented structure a condo building could be constructed. And voila! The problem of poor views would be solved, which in turn would raise markedly the price the condos would be able to command, which in turn would of course justify the $1000 psf land price.

"Only princes and sheikhs, maybe a very wealthy German investor, can buy such fantasies," Moinian said, drawing laughter from those in attendance. Moinian's example, while extreme, is endemic of a market that has experienced such an influx of capital that deals have become either unaffordable or come attached with a business plan so difficult to execute, investors find themselves wary to buy in. The bleak market conditions beg the question of how one can discover value in development parcels these days. Moinian's advice on this was simple: Go West.

Explaining that he categorizes the city into three segments, Lower Manhattan, the East Side, and the West Side, Moinian is bullish on the latter, which he says possesses value relative to other areas of the city and will only continue to appreciate as a result of a number of infrastructural improvements planned for the area including the expansion of the 7 train, and the conversion of the Farley Post Office into a western extension of Penn Station.

Exampling his confidence in the area, Moinian said he purchased a 67,000 s/f parcel on 34th Street, just east of 11th Avenue. The property is zoned for up to 1.5 million s/f, he says, and loose restrictions allow for the development of anything from a hotel, to an office building, to a parking garage.

"It's ideal if you're able to have patience and to wait and sec what the market demands," Moinian said of development opportunities such as this, indicating that he would probably not develop the land for at least a few years.

Moinian has another sizeable parcel on 26th Street and 11th Avenue, another area he said he will most likely wait a few years to develop when the needs of the neighborhood, which by then may be invigorated by a number 7 subway line extension, are more clearly understood.

Moinian isn't putting all his West Side development on hold however. He, along with equity partner MacFarlane Partners, currently are in the process of building a two-phase 1.5 million s/f foot mixed use development on 42nd Street, between 11th Avenue and the Hudson River. The first phase of the project, a 46-story, 500,000 s/f residential building called the Atelier, is already under construction and will be completed next year. The second phase, an as-yet unnamed 1 million s/f tower that will have residential rental units, condos, and retail is scheduled to begin construction after the Atelier is finished and is scheduled to be complete in 2008.

Developer Jules Demchick originally conceived of the Atelier and had even poured some of the foundation before Moinian purchased the development from him. Moinian indicated that the acquisition was essential because it would insure that the two properties shared a synergy.

"Economies of scale truly apply here," Moinian said. "With the development of two properties, we can create better amenities, better retail opportunities, better concierge services, better recreational spaces, better everything."

Some of the Atelier's amenities include a sky-lit indoor pool, a 12,000 s/f health club, a rooftop lounge, and rooftop terraces. The Atelier also will feature 15,700 s/f of ground-floor retail space and a 100-vehicle subterranean parking garage.