Billionaires prefer limestone.
Photo: Getty Images
The last few years have not been very good for the ultra high-end luxury market. Selling prices peaked around 2016, stagnated, then started to sag. By the time the pandemic hit in March 2020, some homeowners seemed desperate to sell at any price: that year, four condos in Extell’s One57 Tower sold for at least 40% less than what they paid for. their owners had paid, according to Douglas Elliman. In January, an apartment on the 58th floor was sold there for $ 16.75 million; the seller paid $ 34 million in 2014 and suffered a loss of 51%.
But what was true for the rest of the top condo market during the dark days of the super-luxury boom has never – at least not until now – been true for 220 Central Park South, the summit of Vornado. limestone tower, designed in a pre-war idiom at the height of the 21st century by architect Robert AM Stern. Between October 2019 and October 2020, 220 Central Park South “kept the very high-end market in the air”, in the words of a CityRealty report published last year. Its condos were the 22 best sellers in town; overall, its 46 sales during that 12-month period amounted to a cumulative amount of $ 1.52 billion. (It should be noted, however, that many of these units were under contract years earlier, before the building was completed.)
Now, as the city’s luxury market is booming again thanks to a perfect storm of pent-up demand, very low interest rates and the fact that the rich got much richer during the pandemic, the 220 Central Park South is doing very well in the resale market. The building had its first resale in April, a $ 33 million sale that closed for 23% more than the $ 26.79 million the seller paid just over a year earlier. In June, a buyer later revealed to be Alibaba co-founder Joe Tsai paid $ 157.5 million for two units which together had sold for $ 102.3 million the previous year. Tsai’s purchase was the third most expensive house ever sold in the United States (the most expensive was also at 220 Central Park South: Ken Griffin’s purchase of floors 51 through 53 for $ 238 million in 2019.) A third transaction was closed on May 19. $ 1 million more than a year and a half earlier. Two more are under contract and are expected to exceed their initial purchase price.
So why is One57 agitated as 220 Central Park South soars? Both, after all, are very tall towers, less than three blocks apart; both were designed by famous architects (One57 architect Christian de Portzamparc is arguably the more prestigious of the two, having won a Pritzker). Both cater to and are marketed to billionaires, and both are setting residential sales records in New York City. Does it all come down to the fact that One57 is at this point – as one broker told me – the luxury real estate equivalent of a used car?
“There are a few other buildings where prices have held up – Greenwich Lane, 150 Charles,” said Donna Olshan, a Manhattan broker who tracks the luxury market. “But the interesting thing about 220 Central Park South is that some vendors actually made a lot of money there. There will always be people at the top who will pay to be in building # 1 in New York City. The building is widely regarded as the second coming of ‘Limestone Jesus’, aka 15 Central Park West, who emerged from the last recession with a bloom when the Russian billionaire Dmitry Rybolovlev paid $ 88 million for Sandy Weill’s apartment (about double what Weill paid). It was, at the time, the most expensive sale in the city. It was also the work of Robert AM Stern, but 220 Central Park South is newer and much larger and has a saltwater pool instead of an old boring chlorinated one. Several 15 Central Park West residents moved after 220 Central Park South opened, including Daniel Och, Och-Ziff Capital Management, and Sting.
Half a decade ago, when it was new, One57, which sparked the super-building craze just south of the park, looked like it may have been the one supplanting 15 Central Park West in the status game: record when one of its penthouses sold for $ 100.47 million in 2015. But that was about all downhill from there. Faced with a glut of inventory when sales of this tranche cooled, Extell listed 38 apartments on the ground floor like furnished rentals, no doubt to prevent them from looking desolate while waiting for the market to recover. Many investors have also rented their apartments, reducing the aura of exclusivity of the building. (There are currently six available at One57; 220 Central Park South has one.) One57 was even – gah! – forgot about a book on the most exceptional buildings in New York. “The spotlight was on him and then he faded,” said Kirk Henckels, then director of Stribling Private Brokerage and co-author of the book. The Wall Street Journal in 2017. The building was not, he says, “architecturally popular”. (The real tower has little resemblance to the original design of the Cascade de Portzamparc waterfall.) From this spring, Extell still had five sponsor units in the building. Even though the sales market has rebounded and then some, the sellers at One57 are still losing money: the most recent resale, To Shark aquarium star Robert Herjavec, was for $ 34.5 million. The seller had paid $ 47.37 million for the 6,200 square foot apartment about six years earlier.
It is not the only large new building where units are trading at a loss. Olshan pointed out a four bedroom apartment at 520 Park Avenue (another limestone skyscraper by AM Stern), now under contract, which was asking for $ 20.5 million, about half a million less than the seller paid in 2018. Jonathan Miller, the valuation guru at Miller Samuel, said that although the discounts at One57 were steeper than at other luxury properties, most sellers who bought trophy properties during the height of the luxury boom were not recovering what they had paid for. “Two Twenty is the outlier,” he said. He adds that 220 Central Park South has a big advantage over One57: it’s actually over Central Park. Steven Roth, the CEO of Vornado, also took special care in making 220 a social hive, which would have social check its buyers, grilling them not only on their financial health, but also on their background and personality, a common decision among co-op boards but rare for a condominium developer. “The marketing strategy was Steve’s Rolodex,” a developer told The Real Deal. “The bet was that he could organize a country club of like-minded people.”
Some of the resale discrepancies between the two buildings are simply due to age. One57 started sales almost a decade ago. Long before resales began at 220 Central Park South this spring, One57 had been eclipsed by newer, taller towers along Billionaires’ Row, such as 432 Park Avenue, 111 West 57th and the very own Central Park Tower. Extell, who started to close in February. Things fall out of favor, things fall apart, the richest buyers move on. This spring, New York Times revealed that 432 Park was creaking and fleeing, with elevators breaking down. (This, even though one seller is hoping to almost double their money with a $ 170 million listing that Miller called “the first sign of ambitious pricing in this market.”) Someday, inevitably, another building will outshine 220 Central Park. South, but some buildings age better than others. “The cream holds up, and everything else doesn’t,” Olshan said. “It’s the oldest real estate story.