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NEW YORK CITY-A ribbon-cutting ceremony Tuesday featuring city officials and real estate executives marked the formal launch of construction on Extell Development Co.’s 34-story International Gem Tower at 50 W. 47th St. First announced three years ago, the 750,000-square-foot project in Manhattan’s Diamond District will be given over primarily to commercial condominiums housing gem and jewelry industry tenants.

In a release, Mayor Michael Bloomberg, who officiated at Tuesday’s ceremony, says the businesses comprising the city’s jewelry industry “are a valuable part of the local economy. But the center of the industry–the 47th Street Diamond District–has seen modest private investment in recent decades, and there is little space for international companies that want to locate here or local businesses that want to expand. The International Gem Tower will offer that space.”

Extell expects to complete the $300-million first phase of construction by year’s end; foundation work had begun last year. It will include three underground levels containing gem industry vault operations, utility infrastructure, parking facilities and retail. The entire project, which will house up to 250 tenants, is expected to be completed by 2011 at a total cost of $750 million. At a news conference Tuesday, Bloomberg expressed confidence that Extell would be able to come up with the balance of the financing. Tishman Construction Corp. is serving as construction manager, working from a Skidmore, Owings & Merrill design that features a curtain wall of embedded diamond shaped steel medallions.

Gary Barnett, Extell founder and president, says in a release that his project means that “for the first time, New York City’s Diamond District will have an international gem and jewelry center on par with other global markets.” One aspect of the Gem Tower that takes a page from the competition is the commercial condo concept: rare in Manhattan’s Diamond District but common in other jewelry centers worldwide.

Under a November 2006 agreement with the city’s Industrial Development Agency, Extell is in line for city and state tax benefits totaling $49.6 million, provided that it’s successful in attracting tenants. As long as 85% of the building is filled with diamond and jewelry industry-related occupants and 50% with businesses that are either new to or expanding in the city, the developer would be eligible for the package of tax breaks, according to the mayor’s office. Extell will begin marketing the space later this month, and the company expects to have one-third of the tower under contract by year’s end, according to a release.

Since that agreement with the IDA, Extell completed putting together land and air rights for the project. In the interim, the tower underwent a name change–it was originally announced as the Diamond Tower–and was scaled back by 50,000 square feet. A spokeswoman for Extell tells GlobeSt.com the project was cut from 39 stories to 34, rather than 32 as widely reported, due to a conflict over air rights. The reduced footprint means a smaller component of office space, according to published reports.

As GlobeSt.com previously reported, Extell is targeting another tenant class with a project across town from the International Gem Center. Its 60-story World Products Centre is intended as a showcase for medical device manufacturers.

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