THE STATE OF THE MARKET

AN INSIDER’S VIEW OF THE LATEST TRENDS IN LUXURY RESIDENTIAL REAL ESTATE

BY ELIZABETH STRIBLING,
PRESIDENT, STRIBLING & ASSOCIATES

Spring is always beautiful in New York City, with tulips standing tall on Park Avenue, and Central Park in full fresh bloom. This spring, the Manhattan residential real estate market also appears to be rosy, but the predominately blue skies of the residential world are not completely cloud free.

Although fears of a real estate bubble in New York City have practically vanished, worries about the impact of rising interest rates on property values continue. However, more reassuringly, recent statistics actually show that the average price of a Manhattan apartment today has increased from last year. At the same time, inventory is mounting, and the length of time to sell a property is also climbing.

The frantic pace of spring 2005 has clearly abated to the beat of a strong steady pulse in 2006. To describe this market, the real estate catch phrase of the moment is a return to normalcy. What exactly does that mean?

A Healthier, More Normal Real Estate Market

Due to an increased number of sales of larger apartments in the first quarter of 2006, the average price of a Manhattan apartment rose to a record $1.3 million in this quarter, according to a survey by the appraisal firm of Miller Samuel. This is a clear vote of confidence for the city and perhaps reflects the record 2005 Wall Street bonuses of $21.5 billion.

However, this approximate 7 percent increase in 2006 over the same quarter in 2005 is nowhere near the 25 to 30 percent annual increase reported the year before. Such gigantic leaps in prices simply cannot be sustained in an already strong Manhattan market, nor would they be desirable.

Although the fourth quarter of 2005 showed a decrease in the average sales price over the previous quarter due to a larger percentage of sales of smaller units, it is the exact reverse trend of an increase in sales of larger units in the first quarter of 2006 over the previous quarter that resulted in an overall increase in the average sales price.

The Miller Samuel survey reports an astonishing 44 percent leap in sales of two or more bedroom apartments in the first quarter of this year versus the last quarter of 2005. However, this survey also noted that the inventory of available apartments for sale was 42 percent higher in February 2006 than in the same month a year ago. This growth in available units undoubtedly reflects a more cautious attitude among buyers.

Following the abundance of dire warnings in the press last fall about a real estate bubble, buyers are simply more prudent today. They attend open houses, peruse the web, and do their own due diligence; they view more property. When they finally do bid, the deal is generally secure, and does not falter due to an overhasty decision.

The frantic pace of the 2005 spring residential market dictated split second on the spot choices. Today, buyers pause before committing themselves. A slower paced market results in intelligent and more thoughtful decisions.

Responding to this more tempered market, today’s serious sellers do not overinflate their asking prices, realizing that market savvy buyers will simply refuse to bid. The result is a real estate arena where the seesaw between the buyers and sellers is on a more level plane. Hence, real estate pundits herald a return to normalcy. Today’s residential market is a healthier marketplace where good fair negotiation can occur.

Over 20 Hotels Converting to Residential

That said, what’s new? What is the current trend in residential real estate in the Big Apple? Loud and clear, the clarion bell of the moment rings to announce the sale of hotels to be converted into residential properties. Uptown and downtown, East Side and West Side, former hotels, large and small, are either being renovated into residential units, orsimply being torn down to make way for residential towers.

The value and continued demand for residential units within the city has risen to such heights that the temptation of hotel conversion is simply too irresistible to many developers. However, the spin on the resulting conversion varies wildly.

Some properties will retain a hotel component part; others will merely offer hotel like services. Some developments will simply wave goodbye to the previous hotel while other future hybrid offerings will embrace their legendary hotel status. The Manhattan horizon will soon offer a tantalizing smorgasbord of newly converted hotel properties from which to choose. Unique and thoroughly different, more than 20 hotels are being transformed into dramatic new identities throughout the city.

First and Foremost, The Plaza

The Plaza Hotel is the grande dame sans pareil of all of these future reincarnations. With its aura of a French renaissance chateau, the Plaza has sat proudly on the most legendary corner in Manhattan at 59th Street and Central Park South for almost a hundred years.

Designed by famed architect Henry Janeway Hardenbergh and opened in 1907, it overlooks the splendid Grand Army Plaza with the magical Pulitzer Fountain where Scott and Zelda Fitzgerald once frolicked.

The Plaza is a Manhattan institution, a place of personal souvenirs and dreams. Who doesn’t have memories of tea at the Plaza’s Palm Court, drinks at the Oak Bar, saucer size tropical Mai Tai’s at Trader Vic’s, or just dancing the night away in the beautiful ballroom? Although each of us has always felt that we owned a part of the Plaza in our collective memories, now a lucky few will indeed be able to purchase a real part of the Plaza.

Elad Properties is presently completely overhauling the entire infrastructure of the Plaza and restoring it to its former grandeur. In recent years, the Plaza had deteriorated greatly; no longer was it an elegant beauty but simply a shabby, faded shadow of its fabled past.

With a grand and ambitious master plan, Elad will breathe new life into the Plaza; it is their stated intention to restore the glory of the past to the Plaza while creating a completely modern state-of-the-art subsystem to insure its preservation for the future.

After initial protests from both the hotel union and concerned conservation and preservation groups, work is now right on target to create a radiant new Plaza. The grand interior public spaces will be restored to their original splendor; the Ballroom, the Palm Court, the Oak Bar and Oak Room have all been landmarked, and will once again become elegant destinations for New Yorkers and chic denizens of the world.

The Palm Court will re-emerge even more beautiful than ever to mirror its original design. The 1907 leaded stained glass ceiling was removed in the late 1940’s; Elad will recreate a 1,200 square foot “laylight “ that will illuminate from above a magnificent duplicate of the original stained glass ceiling.

Tea at the Palm Court will be lovelier than ever. In addition to these restored public spaces, there will be a new 282 room and suite luxury Plaza Hotel which will be entered from the Fifth Avenue lobby as well as from West 58th Street. Upscale retail space will also be created from lower level spaces that will offer elegant and bespoke shopping in high end shops. But what about the apartments? For those of you who wish to purchase a piece of history, how big will they be and what will they cost?

The Plaza Residences Are Selling Quickly

There will be 182 magnificent condominium Plaza Residences overlooking Central Park, Grand Army Plaza and a brand new interior landscaped garden, complete with a reflecting pool. In contrast to what many think, the Plaza Residences will not be just a stringing together of former hotel rooms but rather completely, newly created, custom luxury apartments. The emphasis is on classic elegance with brand new systems and technology.

The Plaza Residences will have a private entrance on Central Park South; Ed Trinka, veteran doorman of 42 years at the Plaza, will continue to welcome residents into the landmarked lobby with its original marble mosaic floor. This mosaic design will be echoed upstairs in the master bathroom floors.

Other custom touches will include exclusive hardware and fixtures that have been created especially for the Plaza with a signature double “P” design. Also, the latest in modern technology will bring concierge services into each apartment; a touch of a finger will result in dinner reservations, shades lowering in individual rooms, or even viewing the approach of your own car and driver as it arrives to await your descent.

Few of the residences are alike; there will be 82 different floor plans with classic proportions and extremely well designed layouts. Ceiling heights will range from 9 to 14 feet. Stately residences at a legendary address and place come with an appropriately high price tag.

One bedroom residences overlooking the landscaped garden will be in the $2.5 million range, while two bedroom apartments with sweeping Central Park views command approximately $9 million. The beautiful “01” line with a stunning living room over the Park can be yours for between $9 million and just over $10 million.

Some of the best layouts at the Plaza Residences face the stately Grand Army Plaza; an extremely gracious two bedroom with a formal dining room apartment is offered between $7 million and $7.7 million. The three bedroom Astor suite, originally occupied by John Jacob Astor, was part of the first offering at $25 million.

There are several duplex penthouses, with as many as four bedrooms plus library, listed between $22 million and $29 million. For the triplex penthouse, start dreaming at $39.5 million. All of the hotel services at the adjacent Plaza Hotel will also be available to the Private Residences on an a la carte basis. Luxury and privacy are the key words.

As Stribling Marketing Associates is the exclusive sales agent for the Plaza Residences, I can report with assurance that sales have been brisk and have already surpassed expectations. However, some of my very own personal favorites are still available or are about to be released. Buyers from Boston and Alabama, Ireland and Italy, as well as Park Avenue and Central Park West have already signed contracts. Many purchasers have combined two or three apartments, or even four, and in one instance, five units to achieve the Plaza Residence of their dreams. After all, there is only one Plaza.

Plaza Hotel Suites Soon to be Available as Hotel Condominiums

In addition to the Residences, sales will begin shortly on 152 of the sumptuous Plaza Hotel suites which will be available for purchase as hotel condominiums. Smaller in size than the Residences, these suites can be used by purchasers for up to four months a year and will include full hotel services plus private butlers on every floor to await your command.

When not in residence, a hotel condo owner can offer their unit for rent as part of the Hotel Plaza regular offerings if they so desire. These hotel condos will range in size from an extremely spacious 500 to 600 square foot hotel room suite to an equally large one bedroom suite of approximately 1,000 square feet to a full two bedroom of approximately 1,470 square feet.

In addition, there will be six duplex penthouses with one or two bedrooms of approximately 1,342 to 2,149 square feet. Some of these duplexes will offer beautiful Central Park views. All of these hotel condo apartments will be furnished in a very upscale style more reminiscent of Architectural Digest than the usual anonymity of a hotel. The baths will be especially lovely with mosaic floors and walls graced with a simple elegant curving flower vine motif.

These hotel condos are currently in the process of being priced and should be available for purchase in the early summer. For frequent visitors to the city, what could feel more luxurious than checking into your very own hotel condominium at the Plaza?

The St. Regis Hotel Condominiums Offer Two Ownership Plans

Waving good luck to the revitalization of the Plaza, let’s stroll down Fifth Avenue to 55th Street where the equally commanding St. Regis Hotel stands.

Originally built in 1904, this Beaux Arts landmark is also a Manhattan institution, home of the King Cole Bar and St. Regis Roof. Although the St. Regis will continue to operate primarily as a distinguished transient hotel, it is presently offering four full floors under two separate forms of residential ownership.

Although the actual two plans differ dramatically in concept, the layouts of these floors are identical and furnished in the exact same style. In both instances, the previously existing hotel rooms have been joined together to create new studio, one bedroom, and two bedroom apartments, the latter by connecting a former one bedroom suite with a studio. The resulting apartments are immaculately elegant and the emphasis here is on service, service, service. St. Regis signature butlers will cater to every whim.

Starwood Hotels and Resorts Worldwide is offering both a limited collection of 24 hotel condominium residences on the 10th and 11th floors of the hotel and another group of 22 similar suites on the 8th and 9th floors as a fractional ownership in the St. Regis Residence Club.

The Residences are conceived of as opulent pied-a-terres for a clientele that already has multiple homes, and wishes to be pampered in St. Regis style. No combination of apartments are envisioned. Prices will range from $1,700,000 to $2,400,000 for studios, $2,750,000 to $5,300,000 for one bedrooms, and $4,100,000 to $7,300,000 for two bedrooms. Purchasers will be able to spend up to a total of 182 days a year indulging themselves in the St. Regis lifestyle.

Equally, it is the allure of the St. Regis worldwide reputation for excellence that is the motivating factor to purchase one or more fractions of ownership in the St. Regis Residence Club. Each fraction will entitle the club member to a total of 28 days a year at the St. Regis.

A member may select one fixed week per year with the remaining 21 nights as Float Time or part or all of this time can be used at other St. Regis properties throughout the world. The cost of membership is determined by both the unit and the fixed time of the year that is chosen.

Each 28 day fraction ranges from $232,000 to $335,000 for a studio to $350,000 to $550,000 for a one bedroom to $415,000 to $750,000 for a two bedroom. As the concept of destination resorts and hotels to be accessed through various club memberships gains daily in popularity, this relatively new form of home ownership should appeal to more and more people.

Brand New Construction at 15 Central Park West

Whereas the Plaza and the St. Regis will proudly maintain their hotel identity, other conversions of hotel properties are eliminating their past entirely. In the case of the two Robert A. M. Stern designed limestone clad buildings that are rising at 15 Central Park West between 61st and 62nd Street, the former Mayflower Hotel was razed to the ground.

Zeckendorf Development L.L.C. combined the Mayflower site with the long dormant vacant lot behind it on Broadway in order to create a new classic Central Park West residential building. Mr. Stern’s design for 15 Central Park West comprises a 20 story House facing Central Park with a 43 story Tower soaring behind it. Both will share a driveway and a signature Stern lobby.

The layouts of the 201 condominium residences at 15 Central Park West aim to duplicate the classic prewar style of neighboring Central Park West co-op buildings but with completely state-of-the-art modern amenities and super large baths and kitchens. The emphasis is on what is deemed the “classic six” and “classic seven” style.

There will also be many duplex apartments in the grand Central Park West tradition. Space is paramount; sweeping layouts are offered with one bedroom condos of over 1,000 square feet, three bedrooms of over 3,000 square feet, four bedrooms of over 4,000 square feet and penthouses of between 5,000 and 6,000 square feet. Naturally, all this space comes with a hefty price tag. Prices begin at $3 million and soar to $43.3 million for a penthouse. After all, this is the last full block to be assembled on fabled Central Park West.

Space and More Space at The Stanhope

Across Central Park, the former Stanhope Hotel opposite the Metropolitan Museum at 81st Street is also being converted into super spacious residential apartments. Originally designed by legendary architect Rosario Candela as a residential hotel in 1926, the Stanhope will be transformed by the Extell Development Company into 26 grand cooperative apartments that are described as having condo rules.

Bidding adieu to its hotel heritage, the future Stanhope is all about space, space, space. Emphasizing the scale of the Upper East Side’s most tony co-op buildings of the 1920s, the English architect John Simpson (yes, he designed the Queen’s Gallery at Buckingham Palace) has created residences of another era for today.

There will be 22 half floor residences, each facing Fifth Avenue, of just over 4,000 square feet, priced between $10.25 million and $17.25 million, as well as three full floor units with a whopping 8,300 square feet on the 14th, 15th and 16th floors, priced between $30 and $35 million.

These baronial full floor residences feature eight bedrooms, a media room, a library plus a sweeping 35 foot entrance gallery, a 42-foot living room and a 26 foot dining room. How’s that for space?

The plum five bedroom penthouse will not only offer 7,067 of interior space but an extraordinary 4,817 square feet of outdoor space as well. For those lucky enough to afford it, the price of the penthouse is $47.5 million.

The cherry on the ice cream sundae at the Stanhope is the rare opportunity to practically custom design your own apartment. Each purchaser will be offered a staggering variety of exotic woods, marble, inlaid borders, fixtures and ceiling designs from which to choose. Life at the former hotel was never like this.

The Barbizon/63 is a Stylish East Side Conversion

For those whose space requirements are a bit more modest, but who nevertheless seek a chic East 63rd Street address, the conversion of the former Barbizon Hotel may be just the answer.

Philadelphia based Berwind Property Group is creating 65 condo residences from its renovation of the recent Melrose Hotel New York, which was built in 1926 as the Hotel Barbizon and would later become the Barbizon Hotel for Women, where young Grace Kelly stayed as an aspiring actress.

Redubbed The Barbizon/63, this new residential condominium will offer one, two, and three bedroom apartments ranging in size from a 680 square foot pied-a-terre to two bedroom apartments of between 1,415 and 1,865 square feet to three bedroom units of just over 2,000 square feet to approximately 2,600 square feet. Prices range from $1,045,000 for a one bedroom; $2,700,000 to $3,450,000 for a two bedroom; and $3,305,000 to just under $5,000,000 for the three bedroom apartments.

A dazzling penthouse with double height ceilings of over 5,000 square feet will be offered at approximately $15 million. Stressing a European style, the Barbizon/63 is clearly positioned to appeal to the international buyer as well as sophisticated Americans. The Barbizon/63 has already been dubbed by some as the more affordable Plaza.

50 Gramercy Park North has the Ian Schrager Up-to-the-Minute Touch

Further downtown, hotel impresario Ian Schrager, known for such super trendy boutique hotels as the Royalton, Paramount and Hudson in New York and The Delano in Miami Beach, is renovating the old time Gramercy Park Hotel overlooking the ultra-private Gramercy Park into a cutting edge 21st Century destination.

Together with his partners Aby Rosen and Michael Fuchs of RFR Realty, Schrager is making his first foray into residential real estate in hopes of sprinkling his own special life style magic over 23 luxury co-ops which will be created in an adjacent 18-story building at 50 Gramercy Park North.

Similar in concept to the Plaza Residences, 50 Gramercy Park North will have a completely separate entrance from the Gramercy Park Hotel, but residents will enjoy private access to the adjacent hotel. In addition, the luxury of hotel amenities with the perks of housekeeping, concierge and dining will also be offered on an a la carte basis to the residents, as well as a concierge or life style management service.

With floor-to-ceiling windows creating the impression that you are actually dwelling within Gramercy Park, and with many apartments that boast double height ceilings, 50 Gramercy Park North will promise a special Schrager twist on residential hotel living. These apartments are priced between $6.25 million and $16 million and include a private key to exclusive Gramercy Park.

Hotel to Residential Activity Will Lead to New Hotel Development

Hotels have always had their own special glamour. At present, the wave of hotel conversions into residential properties is creating multi-faceted variations on Gotham living.

On the Upper East Side, the Mark Hotel off Fifth Avenue on East 77th Street and the Wales Hotel on Madison Avenue and 92nd Street are slated for residential conversion. Macklowe Properties has plans to demolish the Swissotel Drake at Park Avenue and East 56th Street for a 70 story mixed use residential condominium.

The Sutton Hotel at 330 East 56th Street will reopen shortly as the Sutton East Condominium. The former Sheraton Russell Hotel at 45 Park Avenue (37th Street) is now a hole in the ground where New Jersey based SJP Properties and Prudential Financial plan to construct a residential condominium.

Close by the Plaza on Central Park South, the former Intercontinental Hotel has been transformed into 63 cooperative apartments that are presently being marketed.

On the West Side, the Chetrit Group is slated to renovate the Empire Hotel at West 63rd Street and Columbus Avenue, while the former Olcott Hotel at 27 West 72nd Street is presently being converted into condos by Brack Capital. This litany of hotel conversions may ring long and loud but it also signals a fresh rebirth and re-use of commercial Manhattan property.

For those who bemoan the loss of these hotels, take heart. Hotel development may be the next big trend in New York real estate. Room rates are up as supply decreases and demand increases.

New York City tourism is growing, and the hotel occupancy rate is at a high of 87 percent. Real estate investment capital is predicted to flow into new hotels and many residential developers are expected to fold a hotel into their new high rise condominium projects.

Demand creates product. Upscale boutique hotels as well as national mid-market chain hotels are on many a drawing board for New York City as well as the outer boroughs. Don’t worry, Eloise, when you move back into the Plaza after your vacation in Paris, there will be a whole new crop of New York hotels for your Parisian pals to check into all around town.

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