In a recent podcast with The Real Deal, William Zeckendorf, co-chairman of Zeckendorf Development, shared rare details on what’s become one of New York City’s most high-profile developments: 15 Central Park West.
The ultra-luxury condo is the first new development along the famed park in more than a generation, and Zeckendorf discussed the decade-long journey — from idea to construction — that went into building it. Construction started last year, and opening day is expected toward the middle of 2007. In the first seven months of sales, more than $1.1 billion worth of condos were rung up, with a full-floor penthouse going for $45 million.
A scion of one of New York’s most influential real estate families, Zeckendorf also talked about the New York condo market overall — and why now may not be the best time to put shovels in the ground for fresh projects.
THE REAL DEAL: 15 Central Park West recently surpassed $1.1 billion in sales, after opening for sales in October 2005. Did the pace of this surprise you?
WILLIAM ZECKENDORF: We were certainly surprised with the reception of the building in the marketplace from almost day one. But, no doubt, the continued activity in November, December, January was extraordinary. So, to be at $1.1 billion, $1.2 billion today, just seven months after opening, is well beyond our expectations.
TRD: What is your sales goal for the project?
WZ: I don’t think we’re going to quite make $2 billion, but it looks to me like we’re on pace for roughly $1.8 billion.
TRD: Can you describe the larger purchases in 15 Central Park West?
WZ: Sure. The building was pretty well designed to appeal to all segments of the super-luxury market. So, we do have about 15 penthouses, of which 14 are currently sold. Some of the penthouses have four bedrooms, five bedrooms. One of the penthouses has a complete wraparound terrace on Central Park. The penthouses have gone in the range of $45 million; some penthouses are around $26 million.
TRD: Take us through the development process, starting with how you got the park-side land.
WZ: My brother, Arthur Zeckendorf, and I had a layout on this site for over a decade. I had first made contact with the site owner in approximately 1994. I stayed in touch with him periodically over that time period, and then, in 2004, it became obvious that they were real sellers. We put out a competitive bid, and we were the successful bidder.
TRD: Do you think you got a deal?
WZ: The papers at the time said we overpaid, and, in fact, I got a phone call from my mother-in-law that night telling me, “Don’t feel bad — I’ve never regretted overpaying for anything in my entire life.” Since [the bid], I’m being offered sites in the East 20s for the same price per square foot. So, I think history has said we made a pretty good buy.
TRD: What were the construction costs of 15 Central Park West?
WZ: My guess is we’ll come in around $300 to $400 million in hard costs — per foot would be $300 to $400, thereabouts. We certainly had construction inflation, hard cost inflation in New York recently. And I think that’s going to continue for a while. We were actually very lucky and maybe even a little bit smart in that we pre-bought a number of our major trades about two years ago.
TRD: The retail space at the bottom of 15 Central Park West is going to be among the most coveted in New York. Any retail that won’t be considered?
WZ: We prefer not to have food; restaurants are off-limits. Certainly, some other retailers are off limits, but we’re working on finalizing a mix downstairs. But no announcements, probably, until September.
TRD: What sort of mix?
WZ: It’s going to be a mix of credit retailers who can merchandise out of 3,000 feet to 25,000 feet, and there really just aren’t that many [retailers who can]. I was at a community board meeting, and they said, “We’ll put a dry cleaner in there.” Well, a dry cleaner would take 1,000 feet. We have 88,000 feet of retail to lease. A thousand feet’s not going to help us very much.
TRD: Do you think 15 Central Park West could’ve gotten financing and could’ve been built in today’s market, especially considering that lenders are more reluctant to fund new condo projects?
WZ: Of course. 15 Central Park West, everyone now realizes, was and is the greatest of the sites available in Manhattan. It’s a unique property. This project could be built in virtually any market.
But, I think the lenders are exercising some caution and I think they should be. I think that there are signs that, at a bare minimum, it’s a very different market today for the non-15 Central Park West segments of the market than it was a year ago.
TRD: Do you think other developers share that view?
WZ: I’ve been a developer for 26 years, and when you give a developer money, they’re like a cow. They’re going to eat and eat; I don’t know how else to put it. You give a developer money, he’s going to build a building. If a developer can buy a piece of land, he’s going to buy a piece of land.
But, kind of watching the moves of who I think are the better builders in New York, I am seeing some signs of caution.