Flats with Central Park views only billionaires can afford

Published Wed, Oct 16, 2013 · 10:00 PM
Share this article.

[NEW YORK] The transformation of a once dowdy stretch of 57th Street into Billionaires' Row reached new heights on Tuesday, as two of New York City's leading developers reached a truce that paves the way for two more ultraluxury towers on the northern edge of Midtown Manhattan.

Like five others under development in the neighbourhood, the two new towers will feature apartments selling for tens of millions of dollars and promising spectacular Central Park views.

Taken together, the seven high-rises promise to remake the skyline and to redefine what it means to be rich in a city that is a cradle of capitalism and not so long ago was an emblem of urban poverty.

For seven years, the two developers, Gary Barnett and Steven Roth, blocked each other from moving forward with his respective superluxury project. But the men decided the time had come to settle, and on Tuesday they signed a deal ending the feud.

Mr Barnett, president of Extell Development, is already building One57, a 1,004-foot tower, where the penthouse is under contract for US$90 million. To the east, the penthouse at the 1,396-foot skyscraper under construction by Harry Macklowe and the CIM Group is selling for US$95 million, or more than US$11,000 a square foot.

Now, Mr Barnett plans to erect a tower of at least 1,400 feet on 57th Street, just east of Broadway. Directly to the north, Mr Roth, chairman of Vornado Realty, will proceed with a 65-storey (roughly 900 feet tall) residential tower.

Under their accord, Mr Roth shifted the site of his building slightly to the west, while Mr Barnett edged his eastward, so that both skyscrapers could capitalise on what may be their most lucrative features: Central Park views.

"That's the money shot," Mr Barnett said.

But with the surge in construction of apartments at prices only a billionaire could afford, is there a fear of saturation?

"Price really has no relevance," said Nancy Packes, a real estate consultant and marketing executive. "High net worth individuals look at real estate today not as a place to live but as an investment. It's more stable than currency, bonds or stocks. And there are only a handful of cities around the globe where they invest: London, Hong Kong, Singapore and New York."

There seems to be no shortage of billionaires. The Forbes 2013 list of the world's billionaires had 1,426 names, up 200 from last year.

But Thomas Bender, a cultural historian at New York University, said the ultraluxury towers represent a flouting of the social distribution of wealth.

"These are the kinds of buildings that the robber barons built," Mr Bender said, "but it's also what you see in rapidly developing societies where billionaires seek to distinguish themselves in the midst of poverty."

As is the custom, all of the new luxury towers in Manhattan have celebrity architects, including Rafael Viñoly, Christian de Portzamparc and Robert A M Stern. They incorporate chic amenities, like studios for staff and personal wine cellars.

But it is the views that matter.

"Height is where the profit is," said Jonathan Miller, president of Miller Samuel Real Estate Appraisers and Consultants. "There's a premium for views and floor levels. The higher you go, the higher the price you can get."

Michael Stern of JDS Development is planning a very thin 1,350-foot-tall residential tower only a few doors east of Mr Barnett's One57. Not far away, a group led by developer Steve Witkoff is buying the Park Lane Hotel on Central Park South for US$650 million, with plans to demolish the building in favour of a sleek tower with apartments averaging US$7,000 a square foot, according to real estate executives.

Over at East 60th Street, William and Arthur Zeckendorf plan to build a 51-storey building with park views and 30 apartments selling for US$8,000 a sq ft, or US$48 million for a 6,000 sq ft unit.

A century ago, the beauty of the 840 acres that make up Central Park inspired another boom in ultraluxury housing: Millionaires' Row. The Astor, Vanderbilt, Frick and Whitney families built mansions along Fifth Avenue.

But the new luxury towers are not aimed exclusively at New Yorkers or even Americans. The website for Mr Macklowe's project provides information in Chinese, Russian, French, Italian and Portuguese.

It is the lure of enormous profits in a soaring residential market that eventually led Mr Barnett and Mr Roth to end their dispute.

In June 2005, Mr Barnett bought the first of a number of parcels for a high-rise project between 57th and 58th Streets, near Broadway. Two months later, Mr Roth of Vornado purchased a rental building at Central Park South whose lot extended to 58th Street.

Fearing that the Vornado building would block the views of his planned tower, Mr Barnett sought a bargaining chip by quickly buying the lease from the garage operator at the site and a small parcel that sat in the middle of Mr Roth's planned development.

Over the ensuing years, Mr Roth bought out all of the tenants in the building's rent-regulated units and fought unsuccessfully in court with Mr Barnett, whose lease on the garage will eventually expire. They each had something the other wanted.

Several months ago, the two sides began negotiating a deal from which they could both profit. On Tuesday, Vornado said it had paid US$194 million for Mr Barnett's parcel and additional development rights that will allow it to build an even taller tower.

With the two developers shifting their towers in opposite directions, Mr Barnett will go forward with his second ultraluxury building on 57th Street. But he still has one more deal to finalise. Several years ago, he agreed to pay his 57th Street neighbour, the Art Students League, US$23.5 million for its unused development rights. Mr Barnett is now offering to pay the league another US$25 million for the rights to cantilever his tower over its four-story building.

The cantilever would ensure that more of the apartments in Mr Barnett's building would have clear views of Central Park. If the league turns down his offer, Mr Barnett said he would raise the height of the tower to 1,500 feet from 1,400 feet.

Speaking of Tuesday's deal, he said: "This clears the way for the development of two great buildings that will enhance the skyline and contribute greatly to the economy of New York City." - NYT

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to  t.me/BizTimes



Get the latest coverage and full access to all BT premium content.


Browse corporate subscription here