The entrance to the Plaza Hotel is now completely stockaded with chain-link fencing and plywood, the suited doormen replaced with grubby porters ushering construction and demolition workers—and dumpsters—in and out of its fabled and much-filmed front door. Even the somewhat ridiculous (if obligatory) row of flags has been plucked from above the hotel’s famous arcade.
But on a recent sunny day, tourists continued to ogle at the building’s ornate Beaux-Arts façade. And when, at the end of next year, just in time for its centennial, the Plaza’s elegant doors should swing open once again to welcome not only hotel guests but condo owners, they, too, are likely to be tourists: international tradesmen with millions to spend on a choice pied-à-terre.
“I think if you are coming in for a pied-à-terre in New York, you want to be centrally located,” said Jonathan Miller, president of Miller Samuel, a real-estate appraisal and consulting firm. “You’re not so much looking to be in a residential neighborhood as opposed to proximity to midtown, the central business district.”
The condominium developers are counting on these foreign nationals having money to burn—even in the hyper-inflated Manhattan real-estate market.
Given the amount of attention lavished on the condo proposal and landmark issues that were hotly debated last spring, it’s no surprise that the offering plan has created a buzz. Opulent apartments on the building’s highest floors, complete with far-reaching Central Park views, are expected to sell in the $30 million range.
Currently, the state attorney general’s office is reviewing the condo-conversion offering plan, which should be completed by the end of October. As early as next month, the sales office could be buzzing with anxious buyers getting a glimpse of spec sheets, fulfilling a dream of owning a piece of the Plaza. Despite widespread speculation, the building’s owners are trying to keep the plan under wraps.
On Oct. 7, a broker with Stribling & Associates—the exclusive sales and marketing company—spoke to The New York Sun about price estimates still under consideration in the attorney general’s office. However, calls to the same broker are now immediately redirected to Elad Properties, the company that purchased the building for $675 million in August 2004 and is behind the $350 million renovation to a mixed-use building. And the Elad spokesman declined to comment.
But Elad’s reluctance to dish hasn’t stopped conjecture in the real-estate community, where brokers anticipate the 180 condo units will move quickly despite recent reports from leading brokerages indicating that the real-estate market is cooling down.
So, in the current market, are buyers willing to spend $30 million on a luxury condo that won’t be ready until late 2006 or early 2007?
Flashy condo developments such as the Time Warner Center, One Beacon Court and 515 Park Avenue attracted their fair share of international businesspeople, the high-powered South American financier or Russian oligarch. In 2000, when the Ritz-Carlton, at nearby 50 Central Park South, began selling its upper floors as condos, corporate executives flocked to the building. Although 9/11 was a huge setback, the 11 full-floor apartments sold for tens of millions of dollars. (One resell is currently asking $35 million.)
And, importantly, the Plaza’s international cachet plays a central role, making it an ideal pied-à-terre for the financial globetrotter.
“Of the people that I have mainly been talking to, this would not be their principal residence,” said George van der Ploeg of Prudential Douglas Elliman. “I don’t see [the Plaza] really as a family building.”
Mr. van der Ploeg currently has a bicoastal couple searching for a secondary residence. They have expressed interest in obtaining a two- or three-bedroom apartment in the Plaza, which should cost $6.5 million or $8.5 million, respectively.
While prices will be looked at closely when the offering plan is approved, there are other factors to consider—especially maintenance costs. One luxury broker cautions that high maintenance fees at the Carlyle, despite its world-renowned status, warded off potential condo buyers.
“The maintenance is so extraordinary [at the Carlyle] that the inventory is slow to move,” said one luxury specialist. “The maintenance will be a very important factor in the sales at the Plaza.”
Another factor warding off permanent residents is the fact that the building will remain partly transient, with hotel guests coming and going.
Although the hotel was losing money in recent years, its provenance remains known across the world and should bring in plenty of travelers. However, with the condo units given the premium location (facing Central Park), hotel guests will be forced to gaze out on the far less appealing 58th Street.
In addition, Crain’s New York Business reported on Oct. 10 that Prince Alwaleed bin Talal—who sold the entire building to Elad—is planning to buy back the hotel portion for $500 million, after the offering plan is approved. What the Prince does with the hotel portion could also affect the building’s cachet.
The Two Towers
But if sales at another recent condominium development nearby are any indication, the Plaza’s chances are good.
Around the corner of the park, the once grand Mayflower Hotel has been demolished, and a full-block project will soon take its place, between 61st and 62nd streets. Built by Zeckendorf Development, 15 Central Park West will rise from a site that is currently a massive hole in the ground next to Trump International Hotel and Tower. Designed by architect Robert A.M. Stern, the two buildings—43 stories and 20 stories high, respectively—will hold 202 new units.
Although 15 C.P.W. will not be completed until 2007, the sales office opened last month, and has been surprising many who felt the developers overpaid for the land. Almost half the apartments are currently under contract, with sales already topping $600 million, according to a real-estate source.
“We have signed contracts at all price points—from $2 million one-bedrooms to plus-$40 million for a penthouse,” said Richard Wallgren, the project’s director of sales. Having previously worked on the Time Warner Center when it came on the market, Mr. Wallgren said that sales are comparable to that project, but declined to specify.
However, according to a real-estate source, seven of the 15 penthouses are currently under contract, with prices ranging from $20.9 million to $43 million (already topping the price of $42.25 million paid by financier David Martinez at the nearby Time Warner Center in August 2003). Both the Plaza and 15 C.P.W. are expected to bring in about $3,000 to 4,000 per square foot, comparable to other recent high-end condominiums.
While both developments will be offering pricey apartments this fall, there are obvious differences, such as being on different sides of the park and the fact that one is a new construction while the other is a conversion.
If 15 C.P.W. doesn’t have the Plaza’s international stature, it can at least try to make up for that by dressing up in the traditional garb of Central Park West.
As opposed to the Time Warner Center’s modern aesthetic, which clearly sets itself apart from neighboring buildings, 15 C.P.W. is quite deliberately designed to conform to some of New York’s landmarks or famous apartment buildings. “What [15 C.P.W. is] trying to achieve is the prewar Central Park West building—buildings like the Majestic and the San Remo,” said Richard Steinberg, senior managing director of Warburg Realty. Also, similar to the Empire State Building, Rockefeller Center and ultra-selective 740 Park Avenue, the building will be clad in Indiana limestone.
So for some wealthy buyers, the choice might come down to actual antiquity of the Plaza versus a hybrid building that meshes classic design with modern amenities. Regardless, both projects may be safe from a market slowdown by not being located in fringe areas.
“What these two projects have, that the other projects don’t, is that they immediately have location,” said Mr. Miller, who proved that restating the obvious might be each development’s best selling point. “15 Central Park West is on Central Park West. And the Plaza is the Plaza. Those two already have an advantage going forward."