The Real Deal New York

Vornado spending $5,000 a foot to build 220 CPS

Over half the units at the Robert A.M. Stern-designed project are in contract

November 03, 2015 02:00PM
By E.B. Solomont

220CPSCostsFinal

Vornado Realty Trust is spending an extraordinary $5,000 per square foot to develop 220 Central Park South, the real estate investment trust disclosed Tuesday. That price tag includes $1,500 per foot for the land and $3,500 per foot in hard, soft and financial costs, according to Vornado CEO Steven Roth.

“The building has the largest loss factor of any building of its type intentionally, so the amenity packages” – including multiple lobbies, a motor court, garage and swimming pools “are extraordinary and are catering to this marketplace,” he said. Roth also revealed that more than half of the building’s 118 units are in contract.

Fourteen of the units went for north of $50 million, some with record-breaking price points, Roth added during the company’s third-quarter earnings call.  “Our margins are superb and are holding with each sale,” he said.

The total sellout for the luxury condominium project is nearly $3 billion, according to the Attorney General’s office.

The Robert A.M. Stern-designed building has seven penthouses, including five units with price tags north of $50 million. Penthouse 73, a 9,500-square-foot condo asking $100 million, is reportedly in contract for more than $10,500 per foot. Two other penthouses, Penthouses 75 and 76, don’t have price tags, fueling speculation that they could be combined into a single, 14,000-square-foot mega-unit.

Although buyers haven’t been disclosed, hedge funder Ken Griffin, founder and CEO of Citadel, is reportedly looking to combine multiple penthouses into a $200 million-plus pad. Previously, The Real Deal reported that a Qatari buyer was eyeing a $250 million spread.

During the earnings call, Roth said domestic buyers comprise the majority of those scooping up units at 220 CPS. He said 45 percent of buyers are New Yorkers purchasing a primary residence and 30 percent are Americans living in other cities.

In the third quarter, Vornado increased its construction budget at 220 CPS by $300 million to a total of $1.3 billion.

“A lot of it is catching up the budget, which we should have done three months ago,” said Roth. “A lot of it is expansion of the program, adding cost, delivering more product, better finishes.”

But Roth also said construction costs in New York are inflated because of the “enormous number of cranes” in the sky. “There are a handful of contractors who are experts in each trade [and] those guys are running out of capacity,” he said. “There is a bidding premium to get timely delivery of products and services.”

Construction at 220 CPS is currently at the ninth floor and is expected to be completed in 2018.

Earlier this week, Vornado secured a $750 million term loan for its luxury condo development. That financing came just two months after the REIT upsized its loan from Bank of China, receiving an additional $350 million for a total of $950 million.

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