May Eye Candy – 220 Central Park South & the Billionaire Corridor

I was travelling last month and there hasn’t been a lot of new development debut in the last few weeks, so I have but one review for you.

It’s a stunner!

220 Central Park South.
I want to write not only about that, though, but also a few thoughts about what’s happening along 57th Street and what has been dubbed the “Billionaire’s Row.”
As development is happening along 56th, 58th and 59th Streets, as well as 432 Park Avenue at 56th/57th Street, 220 Central Park South, and what will be happening at the Park Lane Hotel in the coming years, let’s think of it as the Billionaire Corridor.

At the same time, the very loud public discussion about these buildings and their future prominence in the skyline, fear of shadows, anger at the ultra-wealthy –

and the buildings’ current impact on the skyline, as 432 Park has already topped out – has resulted in some future tax impacts.

First,

the WSJ reported a new “mansion tax” which would add an additional 1% on the cost of properties priced from $1.75 to $5mm, then add another 1.5% on the portion of a property over $5mm.
To give you an example:
An $8 million dollar apartment sale today would have the following taxes:

• $80,000 mansion tax (1% applied to all sales over $1mm, on the whole amount), paid by the buyer
• 1.825% of the sale price in transfer taxes paid to state and city

  (1.425% and 0.4%, respectively), or $146,000, generally paid by the seller

Under the new regime, these taxes on the same sale would go to:

• $17,500 1% mansion tax (the purchase up to the initial $1.75mm hurdle)
  $96,500 on the amount between $1.75 and $5mm (1% plus another 1%)
  $105,000 on the amount of the sale over $5mm ($3mm at 1% plus 1% plus the last 1.5%)
  TOTAL: $219,000

The transfer taxes would remain the same, or $146,000
So the difference in additional tax would be nearly $140,000 due to the buyer.

Don’t think that this will impact sales in some way?

I do.

As the State legislature nearly is in recess, the chances of it passing immediately are slim to none, but I’m hearing this has roughly a 50% chance of passing in the next session of the State’s legislature.

It’s a little scary.
From what I gather, people expect these expenses to be reflected in the sales prices, and in an environment where the current Mayoral Administration is trying to push through a lot of affordable housing, perhaps this is the concession that the RE industry must give to be allowed to develop new property.
I wonder if this tax “wrinkle” is why we are seeing a number of owners trying to “flip” their recently purchased condominiums.

We just saw Rupert Murdoch’s penthouse go back on the market at One Madison and numerous units go to market at One57 as resales, as well as a penthouse unit at Walker Tower.
It is quite hard to break out the impact of one potential tax that may not even come to pass from general concerns about inflation (which would likely keep properties off the market), and from

thoughts about a bubble in general.
Further, the strength of the new development market, where we’ve seen buildings like 220 Central Park South have 30% of their units go into contract within weeks, at $6000 per square foot or higher, seeming to indicate that it might be a good time for a purchaser of a new development to take advantage and take some money off the table.
Hence, in some way, it’s a little difficult to break out new development from condo sales generally.
Also, the number of units actually hitting the market is tiny, whether along the Billionaire Corridor or anywhere in the city.

Very, very few condominium units will come to the market overall in the next few years in Manhattan.

Many units will be rentals, and many condos will get gobbled up by investors, too.

Moreover, all of the upcoming inventory along the Corridor will be a grand total of about 600 apartments, combined.

And, if somehow this super-thin tower construction is limited by regulation down the road, the existing inventory at that time will become that much more valuable.

There are some incredibly exciting properties scheduled to hit the market in the coming months and years. You have 111 West 57th Street, featured in the image above, a staggeringly tall, skinny building.
Then you have what

may be the tallest of the bunch, the Nordstrom Tower, which could stand nearly 1800 feet tall between 7th and 8th Avenues at 217 West 57th street!
123 West 57th Street, which sits just to the East of the current One57, would end up being shorter, but likely would draw ire from One57 owners whose units face East.
520 Park at 60th Street just hit the market, as well, while 118 East 59th is waiting in the wings. All in all, some real tall blades of grass .
All of this leads up to my thoughts about Robert Stern’s new building at 220 Central Park South.

Developer Vornado has hired Mr. Stern, ever the traditionalist, to create a through-block property that echoes 15 Central Park West and

Riverhouse (at 52nd Street) –

the house/tower combination where the front building/base is about 20 stories high, with the tower portion soaring above on the 58th Street side.

This allows this 920′ tower to have incredible park views, with some distance from the street.

Marvelous ground floor amenities, a private driveway off 58th Street, creating quite the enclave.
Thus far, the pricing guidance is at about $8000 per square foot.

For these views, and this level of finish, it certainly is in line with its competition.

The presentation at the sales office

gives

a feeling of sumptuous luxury and privacy, more than most would hope to achieve in the center of Manhattan.

It is not all about the view, though the protected view sets it apart from its neighbors and will be one of the main drivers.

The Robert Stern-designed interiors and the design and conception of the amenities all come together in this perfect boutique package.

They are currently already 30% in contract, or more, and I understand they are focused on selling the 4-bedrooms at the moment.

I’ve been scheduling showings there.

The entire experience is worth the visit.