Photos: Out With Old, In With New

Neighborhood distress over the demolition of two pre-Civil-War houses to make way for a new development by Toll Brothers, and the loss of other old buildings, led the city Landmarks Preservation Commission in April to designate a new Park Avenue Historic District. Now Toll Brothers is celebrating the new district, pictured from the entrance at 79th Street and Park Avenue on Tuesday. Andrew Spear for The Wall Street Journal

A funny thing happened to Toll Brothers as the development firm prepared to market its new luxury condominiums on Park Avenue: It discovered the virtues of New York City's historic districts.

The company's 16-story building, with walnut-paneled libraries and a three-story penthouse listed for $44 million, was erected on the site of two pre-Civil War houses that Toll Brothers demolished last year despite a failed last-minute campaign to save them.

Neighborhood distress over the demolitions and the loss of other old buildings led the city Landmarks Preservation Commission in April to designate a new Park Avenue Historic District. The district extends along the avenue between East 79th and East 91st streets.

Now Toll Brothers is celebrating the new historic district. Its marketing and media material says its new building—at 1110 Park Ave. near East 90th Street—is "located in the heart of the Park Avenue Historic District" and "will be one of the last new condominium buildings to be built on Park Avenue."

The new building will contain nine apartments with a total value asking prices of $176 million, according a state condominium-plan filing. The smallest condos, which cover about 2,850 square feet, have three bedrooms, a full dining room and library and a Juliet balcony in each bedroom, plus 3½ bathorooms. Asking prices begin at $8.25 million with the condos scheduled to go on the market in the next few days.

A view of the site under construction as it appeared in 2012 Daniella Zalcman for The Wall Street Journal

The landmark designation was approved over the objections of the city real-estate industry, though Toll Brothers didn't voice a public view on the matter. The Real Estate Board of New York, an industry group whose membership includes Toll Brothers, says too many undeserving buildings have already been protected in historic districts. Landmark protection now applies to 27.7% of Manhattan's buildings, according to a study by the board.

Preservationists say developers with approved projects often come to embrace zoning or landmark changes made to preserve an area—when their economic interests are more secure.

"We definitely see this all the time," said Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation. "Developers love landmarking when it is not their property, and they recognize that it actually benefits them."

Asked about the marketing, David Von Spreckelsen, president of Toll Brothers City Living Division, said the company in general looks to "go into a supply-constrained neighborhood" such as the Upper East Side, where there is less competition. A historic designation means "there is less likelihood that buildings can be demolished" and new condos built.

"Landmark status does add value to neighborhoods, clearly," he said.

But he said that developers worry about the uncertainty and risk that a new landmark district can create, especially after they have invested in a property and developed a business plan. "In a landmarked district you don't get the privilege of building all the floors that are available to you."

Lo van der Valk, president of Carnegie Hill Neighbors, a preservation group, said his group was pleased with the new historic district but regretted "that it could not have come sooner and prevented the loss of the two pre-Civil War era buildings that were demolished."

The designation of the new district faces a review by the City Council on Thursday. The council has the power to modify or even rescind such designations, but isn't expected to do so in this case.

Toll Brothers isn't the first developer to get a boost from special-district zoning. During the real-estate boom, community outrage greeted the construction of two glass condominium towers, known as Ariel East and Ariel West, that rose above Broadway near West 99th Street. The taller of the two, Ariel East, was 37 stories.

By 2007, when towers opened, the city adopted tighter zoning rules for the area, limiting building heights on Broadway to 145 feet. Lisa Lippman, a broker at Brown Harris Stevens, who lives in Ariel West and sold many apartments in both buildings, said the zoning restrictions helped sales of the Ariel condos.

At 1110 Park, Toll Brothers has developed a building designed to fit in with its stately neighbors. Its facade is clad in Indiana limestone that echoes the stone detailing on the brick co-ops on either side that were built in the 1920s. Each apartment will have a full floor or more of the 50-foot-wide building, with three sets of 8-foot-high windows looking out on the avenue.

"We spent a lot of time fitting in with the neighborhood," said Raphael Schwartz, the project manager at 1110 Park. "We think it is a privilege to build in here."

Historic districts enhance values and developers know it, said Michele Birnbaum, president of Historic Park Avenue, a preservation group that in 2010 proposed the creation of the Park Avenue historic district. "Realtors and developers always include in their advertising 'in an historic district,' speaking to the fact that this is a desirable place to live."

Write to Josh Barbanel at josh.barbanel@wsj.com