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In 1986, the young husband-wife development team of David and Jean Solomon took advantage of the sizzling real estate market to extract a record price for a New York office building. They and their partners sold Tower 49 to a Japanese buyer for $303 million, a whopping $500 a square foot.
Today, however, it's the Solomons' turn to be squeezed. As the developer of three new buildings in the midst of a real estate recession, Solomon Equities Inc., the couple's company, is bargaining with tenants at a steep disadvantage.
And tenants have been showing them little mercy. Rupert Murdoch's News America Publishing Inc. backed out of a critical deal at the last moment for space in 1585 Broadway, confident that the market will continue to weaken, real estate sources say.
More recently, the law firm Olwine Connelly Chase O'Donnell & Weyher extracted an eye-popping concession package to sign the first deal in the Solomons' tower at 750 Seventh Ave. It reportedly included an unusual guarantee from Citibank, lead lender on the project, that the building and the law firm's interior space would be completed.
Although the Solomons are not the only developers bargaining at a disadvantage these days, they may have the most at risk.
Relative newcomers to New York developing, they are sitting on more vacant Manhattan commercial real estate than anyone else.
And they say they have a partner only on one of their three buildings: Alfred Taubman, the shopping mall developer, is partner in 712 Fifth Ave.
With no other visible sources of capital it is unclear whether the Solomons have the staying power to last out the slump, or whether they will fall victim to the kind of overextended portfolio that now has bankers barking at...