NYC Tallest Condo Corridor Gets New Entrant With Steinway
Manhattan‘s 57th Street, where the two tallest condominium towers in New York are under construction, is poised to get a third skyscraper with apartments perched above the city at near-record heights.
The buyers of Steinway Hall are in informal talks with the city’s Landmarks Preservation Commission and zoning officials about what they may build on the site, which includes the piano maker’s building and an adjacent parcel at 105-107 W. 57th St. that they purchased last year. The investors had plans for a 700-foot (213-meter) tower and now estimate that air rights acquired in the Steinway deal would allow them to go taller — potentially as Manhattan’s third-tallest residential building.
“It will certainly be taller than 900 feet,” said Michael Stern, managing partner of JDS Development Group, which agreed in March to buy the 16-story Steinway Hall and land beneath it with Property Markets Group and Atlantic Development Group. “What its ultimate height will be is yet to be determined.”
The JDS group’s project sits at the center of a high-rise construction boom in midtown Manhattan as developers seek to take advantage of soaring luxury-condo demand. It’s on the same block as the current tallest residential building in the city, Extell Development Co.’s One57, which has set records with two condo sales valued at more than $90 million each. Three blocks away at Park Avenue and 57th Street, Harry Macklowe and CIM Group are building a skyscraper on the former Drake Hotel site that’s slated to rise even higher than the Extell property.
The 57th Street corridor, near such New York icons as Central Park and the luxury shopping district of Fifth Avenue, is appealing to international investors who are seeking Manhattan residential real estate as a haven for cash, according to Jonathan Miller, president of New York-based appraiser Miller Samuel Inc.
“It’s this new high-tower district that has a global appeal,” he said. “It’s almost a new segment of the market: high-end residential immersed in Midtown.”
The median price of new-development Manhattan condos climbed 36 percent in the first quarter from a year earlier to $1.33 million, as a dearth of supply intersected with a surge in demand for luxury units from local and international buyers, Miller said. The number of new units on the market dropped 42 percent in the quarter to 872, according to a report from Miller Samuel and brokerage Douglas Elliman Real Estate.
JDS and its partners plan at least 45 luxury condos on the 57th Street site, said Stern and Kevin Maloney, chief executive officer of Property Markets Group, which is also developing the 24-story Walker Tower in Chelsea with JDS.
Plans for the combined site may include a condo tower with retail at the base or a hotel with condos above it. How Steinway Hall can be incorporated into the project is under discussion with landmarks and zoning officials, Stern and Maloney said. As a landmark, the building can’t be demolished.
The eventual height of the tower, to be built at the 105-107 W. 57th St. site, is “not a contest to us,” Stern said. “We’re just going to try to find the most desirable configuration.”
Unimpeded vistas of Central Park begin at 225 feet, according to Stern.
“It’s all about the views, so we want to maximize the square footage we have above the break of unobstructed park view,” he said.
Part of the site is in a special Midtown zoning district that doesn’t restrict building heights, according to Stern. The development rights acquired with the Steinway purchase allow the companies to expand the number of square feet they can build, including going higher, he said.
“You can probably pull enough out of Steinway,” Maloney said. “The air is there.”
At 900 feet, JDS’s project would be about the height of the One Bryant Park office tower without its spire, and rank as New York’s third-tallest residential tower, according to Emporis.com, a website that collects data on skyscrapers. One57, where Extell expects residents to begin moving in this year, is the current highest at 1,004 feet. Macklowe and CIM’s 432 Park Ave. would rise to 1,397 feet upon completion in 2015. More than a third of the units in that building have already been sold, the firms said in March.
Building trophy apartments with lofty views gives developers, who are paying high prices for land, the best return on their investment, according to Miller.
“Property values rise as you go up, so the higher you go, in theory, the more you can sell those properties for,” he said.
New York is No. 1 on a list of “cities that matter” to high-net-worth individuals, according to the 2013 Wealth Report by Knight Frank LLP, a London-based real estate consulting firm. The number of people with a net worth of at least $30 million living in New York will jump 36 percent by 2022, the firm projected.
The city’s real estate has come “to epitomize the so-called safe-haven market, with overseas buyers looking to escape currency, economic, political and security crises by putting equity into tangible assets that appeared safe from government sequestration,” according to the report, which surveys wealth advisers with a combined 15,000 “ultra-wealthy” clients.
New York’s appeal to global investors has been helped by the “growing availability of high-quality new-build developments,” according the Knight Frank’s report. “This contrasts with the dearth of stock in the years after the financial crisis.”
Extell was one of the earliest adopters in the latest condo wave, breaking ground on One57 in 2009. Buyers have been putting down deposits based on floor plans, a model apartment in the 6,000-square-foot offsite sales office and photographs by a camera mounted on a drone helicopter that show views at different elevations of the 90-story tower.
Extell has increased prices at least twice. A 6,200-square-foot full-floor apartment on the 88th floor was listed for $67 million in September, a 28 percent markup from its initial offering price in June 2011. The 87th-floor unit was increased to $64.5 million, or 36 percent more than in June 2011, sales documents filed with the New York state attorney general’s office show.
The JDS group expects its Steinway Hall deal to be completed this month. Steinway Musical Instruments Inc. (LVB), the maker of its namesake pianos, agreed to sell its stake in the property for $46 million, plus an undisclosed amount to be held in escrow. The land beneath the building was purchased from a separate, unnamed owner.
The narrowness of the 105-107 W. 57th St. site means the developers probably won’t try to match the Extell tower’s height, Maloney said.
“When you get that high with such a narrow building, it might cause the floor plate to be so inefficient, it may rule it out economically,” he said. “It could rise very high, but I don’t think it’s going to be higher than One57.”
By Oshrat Carmiel, Bloomberg
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