The Real Deal New York

Plaza sues retail space architect for damages

October 10, 2008 04:34PM
By Adam Pincus

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Unhappy buyers are not the only critics of the rehabilitation work at the Plaza Hotel. The developer is now one, as well.

Elad Properties, which led the two-year, $400 million refurbishment of the Plaza Hotel, brought a $2 million lawsuit in state court alleging shoddy workmanship and breach of contract against the award-winning architects of the retail space, the Midtown-based TPG Architecture.

The Plaza, which reopened in the spring with 178 condominium units and 282 hotel rooms, has been plagued by legal troubles over the past few months. The developers were sued by a contractor in August, and then the near-buyer of a $53 million penthouse alleged the development did not measure up to the sales pitch. He claimed the windows were too small. In September, Elad fired back with a $36 million countersuit.

Elad’s civil suit, filed in Manhattan State Supreme Court Monday, described poorly designed railings that do not comply with government regulations, an “unsightly” ceiling drop, badly installed lighting and even a koi pond that was not properly waterproofed, in the retail portion of the project, called the Plaza Retail Collection.

The developers are seeking at least $2 million in damages for losses in rent, the cost to rebuild the disputed elements and architects’ fees, the suit said.

The attorney for TPG Architects said Elad had not compensated the firm correctly, leading the firm to notify Elad that it would withhold services if not paid.

“This lawsuit is clearly a direct result of TPG simply wanting to be paid for its services already performed,” the firm said in a statement through its attorney Paula Gart.

“We view these baseless allegations as Elad’s desperate attempt to deflect the real issue at hand and take this to mean that Elad has no intention of compensating its design professionals who have worked so diligently for Elad and the Plaza Hotel over many years for their services,” the statement said.

Elad’s Anthony Nicola, general manager for the multi-level Plaza Retail Collection, said that Elad fixed the problems outlined in the complaint, and is now looking to recoup the costs.

“The retail space is spectacular, and we are more than 90 percent leased,” Nicola said in a statement.

In 2006, Elad Properties trumpeted the design for Plaza Retail Collection, a 160,000-square-foot retail center at the restored landmark at Fifth Avenue and Central Park South with its own entrance on 58th Street.

The exclusive leasing agent for the Plaza Retail Collection is Robert K. Futterman & Associates. Tenants include the Manhattan-based high-end book publisher Assouline, the bed sheet maker Manrico Cashmere, and Maurice Fine Jewelry. Some retailers have already moved in.

A spokeswoman for Elad would not provide the retail rents at the Plaza, but the New York Post reported in January 2007 that the retail rents in the Plaza ranged from $250 to $1,000 per square foot.

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