Ever heard the expression (or some variation of it): "Don’t write a check you can’t cash"? That became literal in the sale of one of the world’s most famous skyscrapers: New York City’s Flatiron Building. After a winning bid of $190 million was accepted last week by the court-appointed referee, something unexpected happened two days later, when the winner just didn’t pay the $19 million deposit.
The winning bidder was Jacob Garlick, a relative unknown in real estate circles and apparently a managing partner at Abraham Trust, a venture capital firm. (The firm’s website has no phone numbers or emails to contact, but does have a contact form area, to which Fortune submitted and did not immediately receive a response.) Garlick attempted to get an extension, but the court-appointed referee for the sale, Peter Axelrod, ruled him out as a buyer following his missed down payment. “I suspect he didn’t have the money, or that he realized he overbid and decided not to proceed,” Axelrod told the New York Times.
Garlick’s aggressive bidding for the landmark surprised competitors, coming up from a starting price of $50 million.
“It's been my lifelong dream of mine since I’m 14 years old. I’ve worked every day of my life to be in this position,” Garlick told NY1. “We are honored to be a steward of this historic building, and it will be our life's mission to preserve its integrity forever.”
The Flatiron Building, built in 1902 and named for its unusual shape at the intersection of Fifth Avenue and Broadway, is one of New York’s oldest surviving skyscrapers, and has given its name to the Flatiron District in which it sits. It faces Madison Square, home of the first two iterations of Madison Square Garden, the fourth version of which is itself in the midst of a real estate redevelopment proposal.
The Flatiron Building, which has been vacant for years since Macmillan Publishers (a longtime tenant) left in 2019, was on the auction block because its five owners couldn’t agree on what to make of the building—and the pandemic’s clearing-out of office buildings didn’t help its vacancy problem. Jeff Gural, the Flatiron’s majority interest holder and a well-known New York real estate developer, told the Times that four of the building’s stakeholders, including himself, were in agreement, but the other, Nathan Silverstein, created a deadlock. Silverstein, according to Gural, wanted to break up the building into five separate properties. The four sued him, which led to the forced sale. At one point, Gural even tried to buy him out. Still, Gural’s got a theory that may be a little wild—he told the Times that he suspects Garlick was doing Silverstein’s dirty work in driving up the price. Silverstein did not respond to the publication’s request for comment.
“Maybe he was just trying to punish us,” Gural told the Times. “I have no idea.”
Now the fate of the historic building is back in the hands of potential buyers. Its value has gone down considerably, from more than $200 million before the pandemic (which crushed office buildings), and it also needs $100 million in renovations, Gural told the Times.
Gural was bidding against Garlick, who was raising the bid at $2 million increments, and told the Times: “I was annoyed. I never thought he’d keep going to such a high price… All he was doing was driving up the price.” Gural now has the option of buying the Flatiron for his last bid of $189.5 million, but he told NY1 that he’s not interested at that price.
Nonetheless, the Flatiron Building was on the auction block after disagreements among its five stakeholders over its future. And yet again, its future is uncertain.
