- Witkoff says Park Lane tower will remain a hotel for now
- `The velocity is not what it was' in high-end sales market
Developer Steven Witkoff is holding off on converting Manhattan’s Park Lane Hotel into luxury condominiums -- for now.
The owners are contemplating a renovation of the 46-story hotel at the foot of Central Park, Witkoff said in an interview. He led a group that acquired the property from the estate of Leona Helmsley for $660 million in 2013, with options including demolishing the existing structure, converting the building into a combination of hotel rooms and condominiums and continuing to operate the hotel. Since then, the allure of building high-end homes has dimmed as new towers aimed at multimillionaire buyers crowd the market.
“The fact of the matter is, the velocity is not what it was,” said Witkoff, whose partners include fellow developer Harry Macklowe. “Because we have a cash flow, we have the flexibility to wait.”
Plans for the Park Lane, at 36 Central Park South, are taking shape as Manhattan’s luxury sales market shows signs of an oversupply after a post-recession construction surge. In the third quarter, the number of homes for sale in the top fifth of the market jumped 8.9 percent, according to data from real estate website StreetEasy. Listings fell more than 3 percent for the other four levels combined.
The median sale price of all Manhattan home sales reached a record $1.15 million in the fourth quarter, propelled by closings of luxury deals in new developments that were agreed to years ago, when work was just starting on many of the properties, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Demand from wealthy buyers is waning as a slew of new units hits the market, according to Jonathan Miller, president of Miller Samuel.
The Park Lane developers “are very experienced and they see what’s happening,” Miller said. “One of the cornerstones of the initial explosion of demand was scarcity. The market has changed and developers that can take the long view are making changes now.”
Witkoff and his partners have shelved an effort to raise cash from Chinese individuals through the EB-5 program, which grants green cards to foreigners who invest a minimum of $500,000 in projects that create jobs. The slowdown in the Chinese economy and unresolved EB-5 reform efforts in Congress are clouding the future of the program, Witkoff said.
The partners are seeking to refinance maturing debt on the property and are in talks with JPMorgan Chase & Co., he said.
The Park Lane Hotel is two blocks north of the 57th Street corridor dubbed Billionaires’ Row, the nexus of Manhattan’s ultra-luxury boom. At Extell Development Co.’s One57 skyscraper, a pioneering project when it broke ground in 2009, a duplex penthouse sold for $100.5 million, the most expensive residential deal ever completed in the city. Macklowe is co-developer of 432 Park Ave., the tallest finished residential building in the U.S., where a penthouse is under contract for $95 million.
Now, at least seven more ultra-luxury towers are under construction in Midtown, all vying for the same buyers. One thing that made the Park Lane deal appealing in 2013 was that, with a business already in place at the property, the new owners wouldn’t have to rush to build condos and compete with the other towers rising in in the area, Witkoff said.
“We would never have the pressure to build when we don’t want to build,” he said.