Sam Chang, who built his reputation as New York’s most prolific hotel developer, is gaining a stronger foothold in the affordable condo market.
Following on the heels of his success in hotels, Chang’s plans to develop a recently purchased site on East 8th Street in Manhattan, as well as another 96-unit project in Queens, could help put him on the real estate map as a major player in a new arena.
“We’re in a sluggish market right now,” said Alan Miller, a principal at Eastern Consolidated and broker on some of Chang’s biggest deals. “He’ll price them right, and he can blow them out the door.”
Chang has made his name on the dozens of “limited service” hotels he’s built throughout the city. He is currently building six on one block of East 39th Street, including a Comfort Inn and a Holiday Inn Express.
Real estate observers say that if Chang, who is the CEO of McSam Hotel and the head of the MikeSam Construction Corp., is able to apply his skill in the hotel business to the condo business, he will be a force to be reckoned with.
“What he brings to the table is the ability to get very difficult deals done in a city like New York,” said Bill Fortier, senior vice president of franchise development at Hilton Hotels. “He takes these little pieces, cuts them into these little slices of pie and gets things right. He tends to get them built and sells them off quickly.”
Lalia Rach, dean of the Tisch Center for Hospitality and Tourism at New York University, said Chang would be able to transfer his hotel success into condominium development if he finds well-thought-out locations and markets the properties to the right audience.
“He’s a very smart businessperson,” Rach said. “One of the things consumers are looking for is value for money. That’s why his hotels have been so successful.”
Chang has already made one successful foray into the condo business, the Eastwood, a 10-unit, six-story, light brick building with retail on the ground floor that Chang developed on East 5th Street and Avenue D in 2005.
City records show that it largely sold out by the fall of 2005, with prices ranging from $585,000 for a 741-square-foot apartment to $764,000 for a 2-bedroom unit measuring 900 square feet.
Eastern Consolidated officials say Chang’s East 8th Street site, which is 4,600 square feet, may very well resemble the Eastwood.
Charlotte Fu, associate broker at Eastern Consolidated, said the 397-401 East 8th Street site — which Chang purchased from the owner of Key Food Sam Obeid — is perfect for another condo project because it comes with rights to develop an additional 20,000 square feet.
The condo also comes as McSam’s new non-hotel projects are creeping into the outer boroughs, with a mixed-use site on Queens Boulevard in Woodside and one in Forest Hills.
City records show that “McSam Queens” is the owner of a building at 63-14 Queens Boulevard, which is being developed into a 96-unit condo project measuring more than 172,000 square feet.
Robinson Lemos, associate broker at Corcoran Group, and his partner Adriano Hultman are marketing several condos in the area, including C Condo, located at 79-35 Calamus Avenue, where units start at $399,000 for an 891-square-foot one-bedroom apartment.
Chang’s project in Forest Hills involves two condo buildings at 64-34 and 65-06 Grand Central Parkway that were originally being developed by developer Howard Lepow; Massey Knakal brokered a deal to sell them to Chang for $7.3 million in early 2007.
Chang was out of the country and unavailable for interviews.
Speculation abounds that Chang may expand further into condo development because he may be able to get a better return on his investment than from doing limited-service hotel properties. He recently began expanding into more boutique hotels from limited-service for the same reason, observers said.
“You find a good location, you build it, you sell it and you walk away,” said David von Spreckelsen, vice president at Toll Brothers. “The one thing he doesn’t have with hotels [that he would with condos] is the attorney general process. You don’t walk away as cleanly as you do a hotel.”
Chang’s current business includes his own low-cost construction firm that is able to undercut nearly every major hotel developer in the city. While his practices have led to confrontations with major unions in the city, should he decide on major condo expansion, he would likely be able to undercut the prices of many large-scale developers.
“If he’s doing it himself, he’s controlling costs,” said Von Spreckelsen. “That stuff is done all day long in the boroughs. I would think he wouldn’t have a problem.”
Meanwhile, Chang’s excursion into condos does not seem to be cutting into his hotel dealings.
In February, Chang furthered his relationship with another hotel brand by increasing his stake in financially struggling Trump Entertainment to 2.33 million shares, or 7.5 percent, according to filings with federal regulators. The move fueled speculation that he may be interested in a takeover bid.
Trump Entertainment officials said they have had no direct contact with Chang.
Also, Chang sold the Holiday Inn Express in Manhattan for $42 million to Magna Hospitality Group, an East Greenwich, R.I., firm that manages several of his hotels.
The developer has several hundred rooms in the pipeline, including a controversial Comfort Inn on Webster Avenue in the Bronx that is facing major opposition, as neighbors fear it could be used for illicit activity.
“Just in terms of the way they do business, they’re not very responsive,” said Greg Faulkner, chairman of Community Board 7. “To be honest, we would have much preferred to have a condo rather than a hotel.”