The Park Lane Hotel, situated at 36 Central Park South and acquired in 2013 for $660 million, remains open to the public as plans for conversion are put on hold. New owner and developer Steven Witkoff originally planned to demolish the hotel and build a complex consisting of both hotel rooms and condominiums, but Manhattan’s oversupply of luxury listings has dimmed demand in the local real estate sphere.
As more high-priced condos hit the market, demand isn’t as high as it was just a few years ago. Developers like Witkoff see the slow down and are willing to wait until demand increases again.
“The fact of the matter is, the velocity is not what it was,” Witkoff said. “Because we have a cash flow, we have the flexibility to wait.”
According to StreetEasy’s 2015 Q4 Market Report, the heavy focus on global and investor opportunities in 2014 is closing out, with many indications that the Manhattan luxury market is in oversupply. Since early 2015, Manhattan’s top-tier market has seen consecutive price declines.
A recent report from the New York Times states that bidding wars on luxury sales are on the decline and asking prices are steadily dropping. Leonard Steinberg, President of real estate brokerage firm Compass, commented on the drop.
“I have seen more broker incentives and price reductions in the last few months than I’ve seen in the last three years combined. The market got carried away with itself in the first half of 2015. Some people went in with crazy pricing expectations,” said Steinberg.
Among these broker incentives include a $5,000 American Express gift card for brokers who can close one of the remaining 78 units at The Oosten, a 216-unit condo building in Williamsburg, Brooklyn. The property began sales over a year ago and currently has listings ranging from a $1.14 million, one-bedroom to a $6.42 million, six-bedroom penthouse. 200 East 62nd Street, a 115-unit condo building developed by O’Connor Capital Partners, designed by Messana O’Rorke and sold by Corcoran Sunshine Marketing Group, is offering agents a $10,000 bonus for one-bedroom deals, $20,000 for two-bedroom deals and $30,000 for three-bedroom deals – as long as the contracts are closed by the end of December 2016.
While many buildings are antsy to get their luxury listings sold in a seemingly slowing market, Witkoff and partners have the plans and security to wait out the overabundance of the 2014 surge.
In the meantime, Witkoff has put plans to raise money through Chinese investors through the EB-5 program on hold as well. The EB-5 program grants green cards to foreigners who invest at least $500,000 in projects that create jobs in the U.S., but a slowing China economy and unsettled EB-5 concerns have Witkoff and partners seeking to refinance through JPMorgan Chase & Co. instead.
