Avison Young Arranges $21.5 Million 99-Year Ground Lease at Prime Manhattan Corner
In one of the more strategically significant long-term real estate transactions to emerge from New York City's competitive investment sales market, Avison Young has successfully arranged a 99-year ground lease at 301-307 Third Avenue. The deal, valued at an estimated $21.5 million, was executed on behalf of Snake River Development, a firm managed by BNS Real Estate. The lessee, Naftali, represented itself throughout the negotiations. At a rate of approximately $300 per zoning floor area (ZFA), this transaction stands as a compelling example of how sophisticated property owners and developers are leveraging long-term lease structures to unlock value, reduce operational risk, and position assets for flexible future development.
Understanding the Deal Structure: Why a 99-Year Ground Lease?
Ground leases are a well-established mechanism in commercial real estate that allow a landowner to retain ownership of a property while granting a tenant the right to use, develop, and occupy that land for an extended period — in this case, 99 years. For the property owner, Snake River Development, the structure offers several distinct advantages that align well with long-term wealth preservation strategies.
According to Charles Kingsley, Principal at Avison Young's New York City office, the transaction was designed specifically to serve the owner's preference to maintain ownership of a premier Manhattan corner asset without bearing the ongoing burdens of property management or development risk. "This transaction allows them to remove any management burden and the ability to transfer the development risk to another party in exchange for a long-term annuity," Kingsley explained.
This annuity-style income stream, locked in for nearly a century, provides Snake River Development with stable, predictable cash flow while allowing Naftali to capitalize on the significant development upside embedded in the site's zoning parameters and location.
A Prime Location at the Crossroads of Gramercy and Kips Bay
The property's location is one of the transaction's most compelling attributes. Situated at the corner of Third Avenue and East 23rd Street, the site sits at the confluence of two of Manhattan's most sought-after residential and commercial neighborhoods: Gramercy Park and Kips Bay. This intersection benefits from exceptionally high foot traffic, strong residential demand, and proximity to some of Manhattan's most beloved green spaces, including Madison Square Park, Union Square Park, and Stuyvesant Square Park.
The corner lot boasts a combined 172 feet of frontage along Third Avenue and East 23rd Street, providing outstanding visibility and accessibility. This kind of prominent street presence is increasingly rare in Manhattan and adds substantial long-term value to any development that will ultimately occupy the site. Whether the end use is luxury residential, affordable housing, or institutional, the location virtually guarantees sustained demand.
Development Potential: By-Right and Inclusionary Housing Options
One of the most attractive features of this ground lease transaction is the flexibility it affords the lessee in terms of future development. The site currently contains an existing two-story building, but the proposed development plans open the door to a substantially larger and more impactful project.
As currently zoned, the property allows for a maximum of 72,268 square feet of ZFA as-of-right. However, by taking advantage of New York City's Inclusionary Housing bonus program, that figure rises to 86,721 square feet of ZFA — a meaningful increase that can significantly enhance the project's overall financial performance and social impact.
The development flexibility embedded in the lease allows Naftali to pursue one of several possible use cases, including:
- Market-rate residential rentals, which continue to command strong rents across the Gramercy and Kips Bay submarkets due to the area's lifestyle amenities, transit access, and walkability.
- Affordable housing rentals, which would allow the development to qualify for the Inclusionary Housing bonus and potentially access additional city or state financing programs designed to incentivize below-market units.
- Institutional use, which could encompass medical, educational, or nonprofit occupancy — all of which are in high demand throughout this section of Manhattan given the proximity to major medical centers and academic institutions.
This kind of optionality is a significant draw for developers evaluating long-term ground lease opportunities, as it allows the lessee to respond to evolving market conditions, financing environments, and municipal policy priorities over the course of the lease term.
The Avison Young Team Behind the Transaction
The deal was orchestrated by a seasoned team from Avison Young's New York City office, reflecting the firm's deep expertise in Tri-State investment sales. The ownership was represented by Charles Kingsley, Principal; Neil Helman, Principal; Erik Edeen, Principal and Director of Tri-State Investment Sales; James Nelson, Principal and Head of Tri-State Investment Sales; and Brandon Polakoff, Principal and Executive Director of Tri-State Investment Sales.
The depth of this team — which collectively brings decades of New York investment sales experience — was instrumental in structuring a transaction that balanced the owner's desire for long-term financial security with the lessee's need for development flexibility. Avison Young's Tri-State Investment Sales platform has established itself as a go-to advisory group for exactly these kinds of complex, high-value transactions where creative deal structuring is essential.
Broader Market Implications: Ground Leases in Today's NYC Real Estate Environment
This transaction comes at a particularly interesting moment for the New York City real estate market. With construction financing remaining tight and interest rates having put pressure on traditional property acquisitions throughout 2023 and into 2024, ground leases have regained favor as an effective tool for both capital preservation and development enablement. For owners, they represent a way to avoid the disposition of assets they wish to retain intergenerationally. For developers, they reduce the upfront equity required to control prime urban land.
The $300 per ZFA pricing achieved in this transaction also provides a useful market benchmark for comparable ground lease transactions in similar Manhattan submarkets. As more owners and developers explore creative structures to navigate today's challenging financing environment, deals like the one arranged by Avison Young at 301-307 Third Avenue are likely to serve as instructive models for how long-term value can be unlocked without relinquishing ownership.
Conclusion: A Landmark Transaction for Both Parties
The 99-year ground lease at 301-307 Third Avenue represents a win-win outcome for all parties involved. Snake River Development secures a decades-long income stream while retaining title to a prominently positioned Manhattan asset. Naftali gains control of a highly flexible, well-located development site with significant ZFA upside through the city's Inclusionary Housing program. And the broader market gains a transparent, well-structured benchmark transaction that underscores the enduring appeal of ground leases in New York City's dynamic and ever-evolving commercial real estate landscape.
As Avison Young continues to expand its Tri-State investment sales capabilities, transactions of this caliber demonstrate the firm's ability to engineer sophisticated outcomes that align closely with clients' long-term strategic and financial objectives.