Celebrity Architects: Behind the Curtain Wall

Celebrity architects have been cast as the real estate equivalent of the new black or the next Ugg boot, and New York’s fashionable and wealthy are flocking to their designer real estate.

Notable architects like Richard Meier, Charles Gwathmey, Frank Gehry and Santiago Calatrava have been hired for residential projects in increasing number, with their innovative designs raising the bar for new development while helping to sell units.

But beyond the lure of curtain walls and trendy interiors, projects by well-known architects have given developers a way to get higher than normal prices in less-established neighborhoods.

Such innovative design doesn’t come cheap up to 60 percent more than standard-issue buildings.

While there is some contention among developers about who came up with the idea first, the concept took off when famous buyers such as Martha Stewart and Calvin Klein flocked to Meier’s 173-176 Perry Street towers in 2000.

Richard Born, principal of BD Hotels and developer of the Perry Street project, says the strategy is paying off beyond expectations.

“We envisioned that people would pay a premium for a building that was a superior design and that had artistic value to it,” he said. Born expected his upscale project would garner $1,000 per square foot on the fringes of a neighborhood where the average apartment was selling for $700 per foot.

Even the savviest real estate experts didn’t predict that raw units would fly off the shelves at $1,500 to $2,000 per square foot. Born said he believes his company got a 30 to 40 percent premium to the market because the towers were a formidable design. Meanwhile, Meier’s new project, next door at 165 Charles Street, recently achieved a staggering price of $4,000 per square foot for a penthouse unit, according to Louise Sunshine, chairman of The Sunshine Group, which is marketing the property.

Louise Phillips Forbes, a senior vice president with Halstead Property who has been active in marketing new developments, said developers have reaped big profits from such projects.

“Traditional developers’ numbers, like the 30 percent profit they need, were [dwarfed by sales],” she said. “The market seemed to have no boundaries of what records could be broken.”

Forbes is currently working on projects with Sydness Architects, a firm known as being the former right arm of architect Philip Johnson. The firm is looking to claim a piece of the action for themselves.

While Born said he “probably started this trend” towards celebrity architects, Forbes said the concept had been around “as long as eight or nine years ago.”

The Related Companies, currently working with notable architect Charles Gwathmey to produce a distinctive tower at Astor Place, said it may have fueled the trend several years ago by hiring heralded architect Robert A.M. Stern to do a condominium at Third Avenue and 65th Street, which opened in 2000.

They did it to gain leverage in an unestablished neighborhood. David Wine, vice chairman of Related, said that the trend of using architects with star-power may have to do with the lack of prime land for development in Manhattan.

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“Developers are pushed to the edges of established areas just slightly off a little bit from prime,” he said. “A lot of times, in order to garner additional market acceptance, you try and overemphasize the product itself.”

In the case of Stern’s 181 East 65th Street, it worked. The project competed successfully with luxury apartment buildings on Madison Avenue and Central Park West, Wine said.

Wine said his company’s Astor Place project, a luxury high-rise in an area mostly marked by tenement buildings, has been on the market for two months and is 40 percent sold. Prices range from $1,300 to $2,500 per square foot, between $3 million to $12 million an apartment.

Similarly, Born said the Perry Street project was on the edges of the West Village when it was built, an area that is now home to an influx of projects. “We were really a block away from where all the better buildings were,” he said. “We were building on the waterfront, but there was only one project there before us. There was not a lot of momentum in that area, so we sort of pioneered.”

The appetite for architecture means other parts of the city will soon bear the distinctive stamp of cutting-edge design. Developers and name architects are teaming up for projects in Park Slope and on the Brooklyn waterfront. Meier has signed on to do a non-luxury project on the edge of Park Slope with Mario Procida of Seventeen Development, which should be ready in two years. Gehry is designing Bruce Ratner’s Nets stadium and the neighboring apartment towers.

Though success means elite architects are now household names and apartments sell for high prices because of their cachet, there are downsides, including cost.

Hiring a famed architect means much more than paying an extra fee of 1 to 3 percent of the project’s total cost, as was recently reported in a story in New York magazine.

Born says of Perry Street that construction costs for the average luxury building then ranged from $220 to $230 per foot, but his project cost $360 a square foot.

“You have to understand that your construction costs will be off the wall,” Born said. “Our hard cost of building the Perry project was probably about 60 to 70 percent higher than the hard cost of building any other building.”

Perhaps the most ambitious design some have called it unbuildable because of prohibitive construction costs is Spanish architect Santiago Calatrava’s plans for 80 South Street in Lower Manhattan. The 835-foot building by Sciame Development would consist of 10 cubes, 45 feet in all three dimensions, with interiors that buyers can customize.

The company’s principal, Frank Sciame, also a trained architect, said he was drawn to Calatrava’s radical design in the fallout from Sept. 11, which he says “really underscored the importance of good design.”

Wine agreed that there has been a renewed emphasis on design that is likely to continue.

“I do think the commonality of having great design is here to stay,” he said. “I think the Calatrava building is a good example of a location out of the mainstream, where they’re using a celebrity architect to get press, and it has a great design. But who knows if it’s ever going to get built, and if so, if it will be successful?”