In 1931 work is completed on the International style Starrett-Lehigh Industrial Building, a joint venture by Starrett Investment Corporation and Lehigh Valley Railroad. The building, adjacent to Pier 66, operates as a freight terminal built over the railroad’s open-air freight yard. Capital from wealthy financier William Starrett financed the 19-story, 1.8-million-square-foot behemoth, the design of which allows freight cars to move directly off the piers and up 30-foot basement elevators. Early tenants include Standard Pressed Steel and Buckminster Fuller. The Lehigh Valley Railroad buys the building in June 1932 following Mr. Starrett’s death and by 1935 reports losses of more than $300,000.
Jacob Freidus, a 30-year-old investor, buys the property in 1944 for an undisclosed sum and offers rental rates of $1.20 per square foot. By the 1960s, with railroads being replaced by highways and manufacturing on a steep decline, Mr. Freidus steers the building building closer to foreclosure.
Real estate mogul Harry Helmsley spends a mere $13.5 million for the Starrett-Lehigh building in a foreclosure auction in 1974. The hulking property begins advertising space at $6 per square foot. The building is designated a landmark in 1986 for its combination of innovative modern-style industrial architecture and horizontal ribbon windows.
Helmsley-Spear, led by Mr. Helmsley’s widow Leona, lists the Starrett-Lehigh in 1998 seeking only sealed bids. Mark Karasick and a group of investors known as 601 West Associates purchases the industrial complex for $152.8 million. Mr. Karasick leads a major renovation costing $30 million in 2000 and reestablishes the old warehouse complex as an upscale office building. High ceilings and open floor plans begin to attract high-end tenants paying $35 or so a square foot.
The building undergoes two major recapitalization deals within two years, both arranged by Carlton Group. In 2004, Mr. Karasick buys out his partners with a $244 million loan provided by Wachovia Securities and SL Green. A year later, San-Francisco-based investment firm Shorenstein Properties acquires a near 50 percent stake for $219 million.
RXR Realty purchases the Starrett-Lehigh in 2011 for $920 million and begins $50 million in capital improvements. The building shuts down in October 2012 after Superstorm Sandy dumps 2.5 million gallons of seawater into the basement. RXR announces plans in February 2015 to sell a 49 percent stake in an office portfolio that includes the Starrett-Lehigh Building to Blackstone Group.
Correction: A previous version of this story stated that Blackstone bought the portfolio from RXR. In fact, they bought only a 49 percent stake.