View Full Version : Penthouse Prices Drop, but Hardly to the Basement

December 12th, 2002, 03:24 PM

December 12, 2002
Penthouse Prices Drop, but Hardly to the Basement

SOME of the best holiday parties this year aren't happening in downtown clubs or on Park Avenue but in unfinished penthouses in Manhattan's loftiest residential skyscrapers. Planned in the expansive late 1990's, when people actually bid against each other, some penthouses have been on the market for more than a year, and their prices are on the express elevator — down. So people who, by brokers' estimates, can spend $10 million to $20 million on a place with bragging rights and a view are being asked over for Champagne and canapés. Their hope is that, if you get enough prospective buyers together and pour the Veuve Clicquot, some may be inspired to make an offer.

"The market for these large living spaces has changed," said Wolf Jakubowski, a broker at Brown Harris Stevens, which has split Warner LeRoy's penthouse at 3 Lincoln Center into two smaller, more affordable spaces. And those have yet to sell. "The buyers we see today are not the dot-com people or high-priced C.E.O.'s we have seen in the past," he said.

The pool is even smaller when you eliminate those who are apprehensive about New York and the chief executives who don't want their names in the news if their industries take an Enron-style pummeling or they go through a messy divorce. Boards will think twice before giving executives the kind of perks General Electric handed John F. Welch Jr., which included a $15 million apartment overlooking Central Park.

"Today, a $10 million purchase represents a much larger proportion of an individual's net worth," said Kathy Sloane, a broker at Brown Harris Stevens. She had a Champagne and canapé party on the 90th floor of the new Trump World Tower near the United Nations one evening last month. Four penthouses had been carved out of a 22,000-square-foot mega-pied-à-terre that a Turkish billionaire had laid claim to before he fell on hard times and his family's Bombardier Challenger jet was seized at Le Bourget airport outside Paris. "People with $100 million probably don't want to purchase something that represents greater than 10 percent of their net worth, even if it's their primary residence," Ms. Sloane said.

So the problem has become how to recruit buyers who still have really big wallets. Before the Young Presidents' Organization, a group of chief executives younger than 50, came to town for a meeting last week, the real estate broker Barbara Corcoran was planning to invite them for cocktails at her best listing, Elizabeth Johnson's $56 million triplex atop the Trump International at 1 Central Park West, which has been broken up into four smaller apartments with asking prices of $7.7 million to $21 million. But the early snowstorm foiled her plans.

"Over the last five years," said Jonathan Miller, the president of Miller-Samuel, a real estate appraisal company, "we've seen a tremendous progression, with developers configuring larger and larger spaces. But a threshold was crossed. As you make the units larger, the slice of the market that can afford it gets very small."

Donald Trump, who has developed a number of buildings with trophy penthouses, said: "The people that want the top floors are usually people that are in the news, people that are very current, people that are extremely successful and people that intend to be successful for a long period of time. Oftentimes, I won't sell the top floor of a building. I'll use it myself, or I'll rent it out."

Americans — if not charismatic, best-seller-writing executives like Mr. Welch — remain the backbone of the market. The four penthouses at the top of the Park Imperial (also known as the Bertelsmann Building, in Midtown) have been sold, three of them to Americans. Richard Wallgren, the sales director for the AOL Time Warner Tower, which overlooks Columbus Circle and will be ready for occupancy next fall, said that three-fourths of the apartments that have been sold there so far have gone to Americans. Two of 10 penthouses have been sold on the top floors of the building, both for $30 million and both to Americans.

At the Trump World Tower, at 845 United Nations Plaza, Cem Uzan, a Turkish businessman, was once going to rule over a 22,000-square-foot penthouse comprising the 89th and 90th floors. Last summer he decided to start a political party in Turkey, and left his deposit, nearly $10 million, on the table. Ms. Sloane, the Brown Harris Stevens broker who is handling the sale of the space, which has since been divided into four penthouses, said she is confident that American buyers will make offers, even though some people have, as she put it, "disavowed" high floors since the Sept. 11 attacks.

If she encounters resistance, she is sure to mention one big advantage the building has. "This is monitored and protected airspace because of the U.N.," she said. "When there are things going on at the U.N., there are frogmen in the water."

At AOL Time Warner, there are plans to split the penthouses on the 76th and 77th floors into spaces of 3,900 to 6,300 square feet. "We had a hole between 11 and 25 million dollars," said Mr. Wallgren, the tower's director of sales.

Even at $11 million, penthouses still must have unparalleled views and four-star restaurants offering room service. AOL will also provide a bike valet to deliver your two-wheeler to street level.

One of the most discussed apartments in New York City, Martha Stewart's 4,000-square-foot raw duplex space in Richard Meier's building at 173 Perry Street, has views of the Statue of Liberty, but it is not a penthouse. A broker who has seen the apartment, which Ms. Stewart never moved into, said she had decided to sell not because of her legal problems but because the place was too small. "I think it was an impulse purchase," the broker said, noting that once stairs are installed, the living space won't amount to much more than 3,000 square feet. She calculated that the apartment would sell for around $6 million.

Ian Schrager's 6,000-square-foot penthouse on the 19th floor of the Majestic (asking price $18.5 million) is apparently on the far side of affordable for what it offers. It has languished on the market since February. "It looks like it should be in one of the condos," said a broker who has seen the apartment. "It has the sterility and high style of one of his hotel rooms."

And Warner LeRoy's vast $25 million apartment failed to sell even when the price dropped to $18 million, then $16.5 million — even with a plush home theater. Now it has been split in two, with a 5,300-square-foot unit priced at $8.75 million and a 3,300-square-foot one at $5.95 million. "Prospective buyers include a Broadway producer and a Middle Eastern diplomat who's been in the news lately, regrettably," Mr. Jakubowski said, declining to provide any further information.

In the hope of creating some buzz, he is planning to hold a party at the apartment for 50 or so friends of Mr. LeRoy who had been there. (Mr. Leroy, who owned Tavern on the Green and the Russian Tea Room, died last year.) Invitations will go out to Barbara Walters, Peter Jennings, Dan Rather, Wendy Wasserstein and Yoko Ono, among others. "They might be interested in buying or will speak favorably to someone who might be interested," Mr. Jakubowski said.

It was in the late 1990's that empty nesters from addresses on Park Avenue and in Westchester County began moving into the kind of fantasy penthouse apartments once considered fit only for playboys. As the interior decorator Mario Buatta, who did Mariah Carey's penthouse, put it, "It's like Cole Porter, the El Morocco, the old glamour of New York that doesn't exist anymore." A quadriplex he designed on the 21st through the 24th floors of the southwest tower of the Beresford is now on the market for just under $15 million.

And of course penthouses offer the chance to claim the highest residential space in New York City. "The 89th floor has just as good a view as the 90th," Ms. Sloane said of the four units available on those floors in the new Trump building. "If I were advising them I'd say, `Go to the 89th floor and buy that apartment, and get a bit of a break.' " The lower apartments go for about $1 million less, in the $13 million to $15 million range.

Donald Trump lives on the top three floors of Trump Tower, at 725 Fifth Avenue. At the Johnson penthouse on the 49th, 50th and 51st floors of Trump International (which, Mr. Trump pointed out, blocks many of the AOL Time Warner building's views of the park), you can watch the tiny skaters circling Wollman Rink as planes land at Kennedy and La Guardia Airports.

At the AOL Time Warner building, Mr. Wallgren said, several people who bought in the $8 million to $12 million range came from nearby buildings like the San Remo, the Beresford, the Majestic, and yes, even the Trump International. "It's probably a lateral move from a price point of view," he said. "What they're wanting are better views and the synergies of the entirety."

Meanwhile, people looking at penthouses at AOL Time Warner will also be looking at the penthouses at Mr. Trump's United Nations building. And so for qualified buyers, Mr. Trump is offering to throw in a free autograph, like the one he gave Cem Uzan. "I met him for probably five minutes," Mr. Trump said. "He wanted to meet me before he signed. A lot of people, before they spend a lot of money, would rather have me sign the contract than one of my officers."

December 12th, 2002, 04:24 PM
Can you imagine having these views?

NY Times Photo with above article:

The 90th floor of the Trump World Tower, with daytime views of the countryside, has been divided in two. It was originally part of a two-floor, 22,000 square-foot luxury apartment.

December 12th, 2002, 11:04 PM
How can an 880 ft. building have 90 floors (especially if they are extra-high as has been suggested). *I understand that there is quite a bit of floor-number-fudging going on (like skipping the 13th floor, or perhaps floors 1-12 as well ;)).

(Edited by Eugenius at 11:05 pm on Dec. 12, 2002)

December 13th, 2002, 12:39 AM
Quote: from Eugenius on 11:04 pm on Dec. 12, 2002
I understand that there is quite a bit of floor-number-fudging going on

See this thread (http://www.wirednewyork.com/forum/topic.cgi?forum=3&topic=16) on Trump and the number of floors

December 13th, 2002, 02:23 AM
Nice view! *Trump is an excellent salesman (blowhard), and he does exaggerate EVERYTHING, but he does deliver on quality. I guess that is why he is so successful.