At a launch event
for the refurbished Waldorf Astoria in early March, Douglas Elliman
sales director Dan Tubb stood in front of a wall of screens flickering
with black-and-white photographs of the hotel’s famous guests.
Marilyn Monroe, Winston Churchill and
John F. Kennedy — all of them were part of the landmark’s storied
history. Now, Tubb said, buyers could have their own piece of that
legacy.
But outside the Park Avenue hotel, which
is offering 375 residential condos for sale on the upper floors, a
public health crisis was beginning to unfurl. The coronavirus had
wreaked havoc in China and spread across the world, overwhelming health
care systems and killing thousands. Within weeks, the number of cases in
New York had surged, shutting down schools and confining millions of
people to their homes.
The Waldorf’s highly anticipated sales launch
— already challenged by the luxury market’s oversupply problem and the
state’s new mansion tax — was plunged into unpredictable territory.
“It’s kind of unfortunate that they
opened when they did,” said Donna Olshan of the boutique residential
brokerage Olshan Realty. “It would have been better had they not gone to
the market.”
By March 16, the project’s sales gallery was shut down.
“In consultation with each of our
respected developer clients, we have decided to promote social
distancing by physically closing,” a spokesperson for Douglas Elliman
said, adding that virtual tours are now available.
Two days later, Andrew Miller, CEO of
Dajia US, the Waldorf’s primary sponsor since last year, defended the
timing. “Market and buyer enthusiasm for the project is incredibly high,
yet we know and respect that people are likely focused on global events
at the moment,” he said, noting that sales had launched to the
brokerage community in late February.
As the fast-spreading coronavirus batters the city’s already weak luxury market, it’s unclear if the Waldorf will emerge unscathed.
Olshan noted that the condominium-hotel
hybrid was far from alone in its vulnerability to the pandemic. “Every
property will be hit now,” she said. “No property is going to escape.”
With an opening slated for 2022, many in
the industry are optimistic about the building’s chances. Some 75 units
have been released for sale at prices ranging from $1.7 million for a
studio to $18 million for a four-bedroom.
“Assuming the world gets back to normal
sometime in the near future, I think the Waldorf will do very well,”
said Nancy Packes, who tracks condo sales and believes the available
units are reasonably priced. “The building itself is spectacular.”
Confidence in crisis
Before the pandemic, the Waldorf was facing another big hurdle: a glut of luxury inventory.
Large condominiums filled with unsold
units reflect the challenges in today’s market: Foreign buyers are
harder to come by, deals take longer, and discounts are the new normal.
Experts predict the city’s unsold inventory will take up to 10 years to
sell.
But Dajia’s Miller said he is confident
foreign and domestic buyers will embrace what the Waldorf is offering,
despite the conditions.
“I think a lot of people have been
waiting for something that inspires the urgency to buy now,” he said.
“Something that feels unique and irreplaceable, and fundamentally
special.”
Dajia was established by the Chinese
government in 2019 to handle the assets of the original developer,
Anbang Insurance Group, which had been taken over
by regulators in 2018. Known for its aggressive track record of foreign
investment, Anbang had paid $1.95 billion for the Waldorf in 2015 and
poured $1 billion into renovations.
The hotel portion of the building will
include 375 rooms operated by Hilton. Above them, the residential units
will be sweetened by access to 50,000 square feet of private amenities,
including a spa, a 25-meter pool, a game room, an enclosed “winter
garden” and four private bars.
Miller said the Waldorf’s sales team is
available seven days a week for virtual showings. Like its peers across
the city, it has had to adapt to an entirely new way of doing business —
and fast. Contract activity at the Waldorf is unclear, though Miller
reports getting thousands of inquiries from all over the world.
“Given the international renown of
Waldorf Astoria New York, we have already completed virtual appointments
for international buyers who have purchased sight unseen,” he said.
Banking on legacy
The Waldorf famously started life as two Fifth Avenue
hotels — owned by feuding relatives — which were later joined together.
It was sold to developers of the Empire State Building in 1929 and
demolished. The second iteration, which occupies a full block between
East 49th and East 50th streets, was the world’s largest hotel when it
was built in 1931.
A beacon of opulence, the Waldorf over
the years earned a reputation for drawing dignitaries and celebrities
including Frank Sinatra, Sophia Loren and Elizabeth Taylor. While units
were not for sale, the hotel rooms were treated as long-term residences
for many guests, including Monroe, who moved into a suite in 1955, about
the same time that her romance with the playwright Arthur Miller began,
and former President Herbert Hoover, who lived there for some three
decades.
After Anbang purchased the building, it brought on the architecture firm Skidmore, Owings & Merrill to work on the overhaul, which has been underway since 2017.
Given the hotel’s decorated heritage, the
work has been a balancing act between honoring the building’s original
Art Deco design and bringing in modern touches.
“This is both an exterior landmark and an
interior landmark — two distinct designations in New York, so it’s the
highest degree of difficulty,” said Skidmore’s Frank Mahan, who noted
that his team worked closely with the Landmarks Preservation Commission
on the project.
A separate entrance will be created for
residents, to separate them from hotel traffic. “The Spirit of
Achievement,” a winged statue by Icelandic artist Nina Saemundsson
installed above the entrance when the hotel opened 89 years ago, has
been brought indoors while work is ongoing but will eventually return to
its original location.
Waldorf team members hope to create the
impression that the building is accessible to a wide swath of buyers —
setting it apart from luxury towers where the barrier to entry is
several million dollars — though they acknowledge the Waldorf’s price
points are still inaccessible for most.
Inside the model two-bedroom — a
relatively modest offering compared to some of the larger units —
soundproofing insulates the space from the usual city drone, and the
room’s color palette is mostly muted: polished marble countertops, gray
couches and bronze detailing. Interior designer Jean-Louis Deniot said
the restrained atmosphere was intentional.
“It doesn’t have really a predefined
style apart from the fact that, yes, it’s to remind you that you are
part of the Waldorf Astoria,” he said.
In the bathroom, tiles feature a Waldorf-patterned motif.
“Everything in the apartments in the
Waldorf Astoria is very bespoke,” said Tubb, who left Corcoran Sunshine
last August to market sales at the building for Elliman. “You’re not
going to go out and find something on the shelf somewhere else. It’s all
custom.”
Weathering turbulence
Anbang has been through an upheaval since its record-breaking deal to buy the storied hotel.
In February 2018, it was seized by the Chinese government as part of a crackdown on companies
spending heavily on foreign assets. Three months later, Anbang’s chair,
Wu Xiaohui, was sentenced to 18 years in prison for defrauding
investors.
After regulators took over the firm, it
was dismantled, and several of its foreign assets were sold. Those
remaining were taken over by Dajia.
The developer’s gamble is not only that
it can draw buyers to the iconic building, but that it can re-create the
glory of the hotel. At the moment, though, the industry is in survival
mode, struggling to navigate the swift and brutal economic fallout of
the coronavirus pandemic. At some establishments in the city, occupancy
reportedly dropped as low as 15 percent, and at least one — Ian
Schrager’s Public on the Lower East Side — shut its doors. The long-term
effects remain unknown.
“For the near term, hotel occupancy will
be decidedly lower than before the pandemic started, and as for many
businesses it may be as long as two years before ‘business as usual’ is
conducted here and around the world,” said Barry LePatner, founder of
construction law firm LePatner & Associates.
There were also some positive signs in
the sales market, early on. Between March 9 and March 22, there were 35
contracts above $4 million signed in Manhattan, according to market
reports by Olshan Realty. But halfway through that period, in-person
showings were prohibited by the state, and contracts dropped as low as
two in the week ending March 29.
At the Waldorf, with so many units to
move, the redevelopment was always going to be risky. But Stephen
Kliegerman, president of Halstead Development Marketing, said big
projects typically plan for longer sellouts and a degree of
unpredictability.
With that, come pitfalls.
“Large-scale projects become very
difficult to plan out over time because you may be going through
shifting economies and shifting marketplaces,” Kliegerman said.
In late February, Dajia’s two-year period
of regulatory control ended, but the company is still looking to
offload foreign assets. Since the outbreak of the coronavirus, at least
one deal — to sell a $5.8 billion portfolio of U.S. hotels — has been thrown into peril, according to Bloomberg.
Miller declined to comment on the report
but said there were no plans to sell the Waldorf. “I’m pleased — and
occasionally a bit surprised — that that never came up as a real
option,” he said.
“Everyone at Anbang and at the regulatory
commission and now Dajia understood that the Waldorf Astoria is
something unique and special,” Miller explained. “Having embarked upon
this journey to restore and reimagine the building, it was an obligation
of everyone to see it through.”
https://therealdeal.com/issues_articles/the-waldorf-astorias-big-gamble/
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