Central Park’s new peaks

Central Park South sits in the heart of Manhattan, but this thoroughfare between Fifth Avenue and Central Park West has existed in real estate limbo. Far removed from the cool quarters of Downtown but not quite reaching the rarefied elegance of the Upper East and West sides, this choice slice of 59th Street has traditionally served as a respectable-yet-unremarkable residential destination for New York City’s bourgeois elite.

But a series of staggering transactions over the past 12 months has propelled the Central Park South corridor to the upper ranks of the global property spectrum. First came Russian billionaire Dmitry Rybolovlev’s then record-setting $88m purchase of former Citigroup chairman Sandy Weill’s 6,744 sq ft penthouse at 15 Central Park West (15 CPW) last December. Then, early this spring, casino magnate Steve Wynn paid $70m for an almost 11,000 sq ft penthouse duplex at the top of the Ritz-Carlton Hotel at 50 Central Park South.

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Now a pair of penthouse deals at One57 – a 1,004ft hotel and residential tower rising just below Central Park South – have reached approximately $95m each according to developer Extell Development Company, a new record for New York City.

Set one block back from Central Park, One57 (which was affected by hurricane Sandy last month when 85-mile per hour winds damaged the tower’s construction crane) has already topped prices of $8,700 per sq ft. Despite bad press over delays, the development has managed to emerge as the quarter’s game-changer nearly a year before construction is finished.

The Time Warner Center is a short stroll away, as is the Plaza Hotel, where a 6,000 sq ft apartment sold early last year for $48m. With their proximity to Central Park South and the premium this commands, these buildings are emblematic of Manhattan’s post-recession appetite for residential towers that rival commercial skyscrapers for cost and scale.

Upon completion next summer, One57 will be New York’s tallest residential building – almost 250ft higher than the Frank Gehry-designed New York by Gehry on Spruce Street. Designed by architect Christian de Portzamparc, One57 will also include a 210-room Park Hyatt hotel with spa and concierge services.

Gary Barnett, president of Extell, says: “It took 20 [real estate] transactions and more than a decade to assemble, but we are in the dead centre of the street, which provides lateral, long views of the park. And buyers are willing to pay a tremendous premium for prime park views.”

Barnett says more than half of One57’s apartments have been sold – though these figures cannot be independently verified – pushing the 92-unit building’s total sales to more than $1bn since it entered the market last November. Michael Holtz, owner of upmarket travel agency Smart Flyer, currently lives in a Richard Meier-designed apartment on Manhattan’s West Side but purchased a three-bedroom, park-facing apartment at One57 in December. “I collect good real estate the way some people collect art,” he says. “This type of real estate is where the world is headed.”

However, challengers are already emerging from both sides of Central Park. Just across from the Museum of Modern Art, for instance, the 50-floor Baccarat Hotel is due for completion by 2014 with 61 one- to five-bedroom private residences. Nearby, French architect Jean Nouvel’s long-delayed hotel-residential tower finally appears to be moving forward. This pairing of hotels with condos – pioneered at buildings such as Trump International and the Time Warner Center – is proving lucrative for developers close to the Central Park South corridor.

Computer-generated image of One57

The 1,400ft 432 Park Avenue, a hotel-less tower, will loom over One57 when it opens in 2015. Set just east of Central Park South on Park Avenue between East 56th and 57th Streets, 432 Park Avenue will include 147 residences, priced between $5m and $82.55m. At roughly $10,000 per sq ft, 432 Park Avenue’s uppermost end is both taller and costlier than One57. Having reportedly raised prices twice in recent months, local brokers suggest 432 Park Avenue could register New York City’s first $100m sale.

Despite those stratospheric sums, both buildings have yet to top the $13,000 per sq ft that Rybolovlev paid for his home at 15 CPW last winter. Now almost five years old, but having weathered the recession with repeated record resale figures, 15 CPW, and the nearby Time Warner Center, are proving the long-term viability of the Central Park South corridor.

“This [top-end] market is deep and broad, and all of the buildings work well with each other,” says Pam Liebman, president of the Corcoran Group, which is advising Extell. “One57 is benefiting from the price standards set by 15 CPW much as 432 Park will benefit from One57’s pricing.”

Still, neither One57 nor its rivals will benefit if the building fails to be delivered on time and as promised. Developers of the condominiums at the nearby Plaza Hotel, for instance, were sued by numerous buyers over apartment layouts and finishes that did not meet expectations.

Perhaps the greatest unknown is the long-term viability of Midtown’s tower trend, which is now reaching critical mass. For the moment, new developments such as One57 are capitalising on both their relative rarity and the abundance of global capital. But this momentum, and the record-breaking sales, can only be sustained by the arrival of increasingly taller, flashier and more expensive towers.