The towers just south of Central Park are supertall and eye popping, but as sales taper off, and as opposition to them grows, a hush envelopes the design community.
By Richard Massey
At least publicly, no one in the design world really wants to talk about Billionaire’s Row, the band of supertalls in various stages of development on and around 57th Street in Midtown Manhattan.
For all the ingenuity and expertise that went into these buildings – 432 Park Avenue, for example, is only 93 feet wide but an astounding 1,393 feet tall – they are not necessarily welcome additions to one of the world’s great skylines.
Instead, they are polarizing, caught in a softening market, and for many observers, nothing more than outsized, de facto safety deposit boxes for the international super rich. Rising from the ashes of the Great Recession, in an era of tight credit and big cash, Billionaire’s Row is a trend in New York real estate that many would like to see fizzle out.
Indeed, in June, New York Assembly Bill 7807 was quashed. The bill, initiated by Mayor Bill de Blasio for affordable housing, would have uncapped the floor area ratio, or FAR, that regulates the bulk and density of buildings in New York City. According to New York Sen. Liz Krueger, the bill needs “further vetting and amending to remove the potential for unchecked growth in the neighborhoods already strained by new luxury developments and towers.”
But a few of the supertalls are already finished, and a few more – including 111 West 57th Street, set to be one of the tallest in the Western Hemisphere – are on the way, and not just along Billionaire’s Row. And the names that are involved with supertalls are among the most recognizable in the industry: Vornado Realty Trust, Hines, Goldman Sachs, and JDS Development Group, among others.
The big question is, with this cluster of supertalls changing the game on the ground and in the air, what happens next?
“That’s what everyone is trying to get their arms around,” says Jonathan Miller, president and CEO of Miller Samuel Inc., a Manhattan-based appraisal and consulting firm.
Miller, a veteran of the New York real estate scene for 30 years, was the only person who agreed to speak with The Zweig Letter about Billionaire’s Row.
“I love that the skyline is changing” he says. “I’ve lived here since the mid ‘80s and I like it. But it’s polarizing. It’s mixed interpretations. There are extreme views. It’s a New York characteristic.”
Two professors, multiple architects and design firms, and one real estate company, either declined a request for an interview or did not even respond to a request for an interview. One respondent, however, who did not want to be named, said this about the supertalls cropping up south of Central Park: “There are a lot of powers at work here, and by powers, I mean money, collaborative opportunity, and politics … none of the large NYC firms want to touch this [story] – I can’t blame them.”
Those comments weren’t hyperbolic. The numbers around the supertalls, and Manhattan condominiums in general, are astronomic. CITYREALTY, in its Manhattan New Development Report issued in June, provided a summary of the industry. Using its metrics, CITYREALTY estimates that borrough wide, there will be about $30 billion in condo sales through 2019, and that 92 condo projects with about 8,000 new units are under construction or proposed. Billionaire’s Row, of course, does not fit the typical mold, as evidenced by the persistent rumor that a penthouse at 220 Central Park South is under contract for $250 million – even by New York standards, a phenomenal number.
Designed by brand names like Robert A.M. Stern, SHoP Architects, Rafael Vinoly, Jean Nouvel, and Christian de Portzamparc, the skyscrapers of Billionaire’s Row are marvels of the modern world with every possible finish and amenity. But with such a narrow target market – foreign investors looking for a safe place to stash their cash – they are detached from the world over which they tower.
Miller explains: “We ended up building the world’s most
expensive safety deposit boxes. You put your belongings there and rarely visit.”
For an international investor, there’s plenty to fear in the global market: a recent coup attempt in Turkey; Brexit; the economic decline and recent impeachment of President Dilma Rousseff in Brazil; the ongoing oil slump; bombastic North Korea; and a sluggish economy in China. At least for some, investing in a supertall with breathtaking views of Central Park is a safe bet. But for the United States, and in essence for the entire world, a profound question looms – who wins the presidential election, Donald Trump or Hillary Clinton?
As the world continues to turn, the supertall market might have already peaked. Sales are not as brisk as they once were, and pricing is being negotiated downward as the New York press chronicles the decline.
“There’s not too many [condos] for sales, there’s too much for sale at too high a price,” Miller says. “What we’re building doesn’t match demand. I think there was an assumption there was an infinite source of demand.”
While the fate of Billionaire’s Row might be uncertain, there are no doubts about the submarket beneath the ultra-luxury price point. That is, sales of units priced between $1 million and $3 million.
“That’s currently the sweet spot,” Miller says.