NEW YORK — Real estate firm Extell Development is facing some obstacles over its proposal to build the New York Diamond Tower on West 47th Street in Manhattan’s Diamond District.

Chief executive officer Gary Barnett sparked a debate last year when he bought several buildings on the south side of 47th Street and the north side of West 46th Street and announced plans to demolish them to build a 725,000-square-foot skyscraper devoted to an upscale, modern, global diamond exchange. Barnett did not return a phone call seeking comment Monday.

Businesses on the street — many third- or fourth-generation family firms — were surprised and turned off by the project, even though the street is notoriously dilapidated with old-fashioned buildings and a lack of technology.

Diamond Dealers Club, a prominent diamond bourse in the area, was approached by Extell, but decided against moving into the building. On Monday, the firm said it had renewed its lease at 580 Fifth Avenue, known as the World Diamond Tower, where it has been since 1984. The new, 10-year lease of the 25,000-square-foot space includes the renovation of the inside and outside of the building, as part of a $25 million capital improvement program. Additional elevators are being installed and offices updated; new vaults were put in last year. Renovations are to be completed by June.

“The Diamond Dealers Club is the most important diamond bourse in the World Federation of Diamond Bourses, and our members want the many unique services that 580 provides,” Jacob Banda, president of the DDC, said in a statement.

The 75-year-old DDC has more than 2,000 members, including manufacturers, dealers, brokers and rough diamond merchants.

This story first appeared in the January 9, 2007 issue of WWD. Subscribe Today.

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