Elad Properties, the new owners of the Plaza Hotel, have confirmed that they a planning a conversion to luxury condominiums.
However, the residential component is only part of Elad's spectacular plans for the landmark building.
Mike Naftali, president of Elad, announced that the hotel will be closed in April for a series of renovations, to re-open at the end of 2006 as a mixed-use property, complete with hotel rooms, condos and an exclusive department store.
Elad is planning to spend $100 million to "help return the Plaza to the position of prominence it enjoyed throughout most of the 20th century," Naftali said in an official statement.
To that end, the top 12 floors of the building will be turned into 200 luxury condo units, ranging in size from one to four bedrooms, while the lower levels will house 150 hotel rooms and a 160,000 s/f department store described as "even more exclusive than Saks Fifth Avenue."
The new, improved Plaza is likely to attract a whole range of investors, according to New York real estate experts, including Europeans looking for a second home in the city and retired baby boomers eager to take advantage of hotel amenities.
"I think the buyers will be mostly secondary or tertiary residents, entertainers who want to play in the city, out-of-town financiers, a lot of Europeans will have interest," said Daren W. Hornig, president of the Quest Group. "I don't see it as a primary residence--the largest unit will be 3,500 s/f, which is large, but an uncommon size for a typical New York family."
Esther Muller, of Esther Muller Consulting, Inc., thinks the units at the Plaza will be coveted more for the investment potential than anything else.
"In general, the hotel to condominium conversions, not only at the Plaza, but everywhere, serve those investors who buy their second or third home and also see it as an additional opportunity for their real estate portfolio," she said. "It's really a perfect investment in one of the most beautiful locations in the world."
As far as prices are concerned, Scott Durkin, chief operating officer of the Corcoran Group predicts that the condos will bring in anywhere from $2,500 to $3,000 per s/f.
"I think most of the condos will be facing the park, so you are talking well over $2,500 per s/f," said Durkin. "That is what they get now in the tower at the Pierre, which is right across the street."
In addition, the announcement that Elad is looking for a department store for the property has retail brokers holding their breath.
"Harrods has looked in New York and they seem a likely candidate," Faith Hope Consolo, chairman of retail leasing and sales with Prudential Douglas Elliman.
Elad Properties bought the building in last August for $675 million.
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