Condo Conversions Continue as Apartment Prices Pass $1M

NEW YORK CITY-With apartment prices soaring past the $1-million mark in Manhattan, the conversion of office buildings and hotels continues here as the market demands it, according to industry experts.Speaking at the Association of Real Estate Women meeting yesterday, Darcy Stacom, EVP/partner Investment Properties Institutional Group/CB Richard Ellis, explained that condo conversions create temporary, short-term jobs but probably resulted in long-term job loss in the hotel industry. However, she sees the trend continuing–for the time being. “If that is what the market is demanding than that is what the market will get,” Stacom said.One notable condo conversion on tap for Manhattan is at the Plaza Hotel. The property’s new owner, Elad Properties, plans to close the hotel on April 30 for renovations. When the $100-mmillion-plus renovation project is complete, the Plaza will feature 200 luxury condominiums, in addition to 150 hotel rooms and approximately 150,000 sf of retail. “Everyone is trying to guesstimate the price per sf,” said Jacky Teplitzky, EVP at Prudential Douglas Elliman. “Initially it was $2,000, then I heard $2,500 and now I just heard $3,000. It has created a lot of interest.”The conversion plans even piqued the interest of the city council, which is considering a bill that would limit the number of condos to 20% of a hotel’s existing rooms, explained Michelle Adams, executive director of the Association for a Better New York. Civic unions such a ABNY are “not thrilled” with the city council dictating how owners should and can develop their property, she said, adding that the legality of the bill is currently under review. However, with the uptick in the office market conversions of these properties may experience a slow down, Stacom said. “The office market has picked up so conversion from office into residential will slow down,” she said. Also, hotels are doing well so investors want to buy hotels to invest in hotels, she added. “Sheer economics will drive this, not that people don’t want to do this.”