The Highest of the High-End Takes a Hit

Like the rest of the Manhattan real estate world, this column devoted significant coverage over the past couple of years to developments at the 15 Central Park West and the Plaza. The two properties were full of promise and had been selling units at a brisk pace.

It was more than just the media nexus of the New York apartment market and human beings' inherent fascination with the lifestyles of the rich and famous. In fact, it was hard not to write about the apartments. Sales from the two much sought-after buildings actually pushed the average value of New York condos up significantly.

After all, many of the sales at the two buildings took place in the last quarter of 2008. So, when many an interested reader turned to the end of the year quarterly reports to see where the New York City apartment market was headed, the top-line results were not what many feared - a significant drop-off in prices - but instead an actual increase in the average price of a New York apartment.

All thanks to the super-high end Plaza and 15 Central Park West. Oh how times have changed.

Of the two units, the Plaza has suffered the most damage. 15 Central Park West has certainly taken a hit during the recent downturn, but in general it has weathered the storm almost as well as could reasonably be expected. The Plaza, on the other hand, is an abject lesson in avoiding speculative bubbles.

The developers were racked with allegations of playing off the name and fame of the building - even leading to a lawsuit by a Russian client that directly accused them of engaging in "bait and switch" tactics.

While that suit - and the countersuit - were settled out of court, the bad publicity that stemmed from it and other complaints from some of New York's wealthiest real estate buyers led to a storm of bad media coverage.

Many that bought units while the Plaza was all the rage have sold them for sizable losses - or at least have tried. A number of stories have emerged of sellers taking hits of more $4 million or more - and that's to say nothing of the opportunity cost of all that money being tied up for so long.

It will be interesting to see the developments at the Plaza. As sellers get more desperate to unload eight digit investments gone bad, opportunities for truly incredible investment opportunities may open up.

Whither goes the Plaza goes New York? Not quite, but it's hard to see their property values moving in opposite directions for very long.

Nicholas Adams Judge is a freelance writer specializing in business, politics and economics. He holds a B.A. in political science and will begin his PhD studies in political economy and public opinion next fall. He has studied economics and political science at a number of different institutions, both here and in the U.K., including Amherst College, Warwick University, Oxford University and the University of Massachusetts-Amherst. New York City Real Estate