Michael Stern talked – he talks a lot – but I didn’t really listen. Perhaps he was talking about the bathroom floors in white onyx. Or maybe it was the copper roof that was restored with materials from the original supplier in 1925. “I know this stuff. I think it’s super cool, ”said Stern. Or maybe it was the mind-boggling complexity of building an incredibly thin 1421-foot tower in the middle of Manhattan, strung like a needle through a historic monument?
I couldn’t hear it because I was in a trance, fascinated by a singular view of Central Park. It struck me just as I turned right after I got off the elevator on the 43rd floor: through floor-to-ceiling glass windows was an uninterrupted, perfectly centered view of the great creation of Frederick Law Olmsted.
It was passionate. I felt like I had transcended the mouth of the city and the park had unfolded like a fine tapestry in front of me. Finally, my dominance over her seemed a bit obscene. From my perch, it seemed like I could dive like a high diver and dive into Onassis reservoir as if it were my backyard pool.
It was early March and I joined Stern for a tour of 111 West 57th, probably the most dazzling new click of thorny residential towers at the edge of the park which reshapes the city skyline. Known as “supertalls”, these are engineering marvels that could not even have been built ten years ago.
They are also monuments to a time when billionaires ruled the earth, and Russian oligarchs, Chinese princesses, Middle East sheikhs and Western hedge fund managers poured money into Manhattan and the central London looking for sumptuous apartments that also served as safes.
When Stern and his partners launched their tower in 2014, the market for “luxury apartments” in New York had become so overheated that the term had ceased to have much meaning for units whose price varied from a few million dollars to tens of millions. The demand was such that Stern would sell a building on the basis of a plan and an exhibition hall.
This is no longer the case – even before the coronavirus pandemic. In recent years, buyers have taken their time, knowing that the goods won’t go away if they wait, and that suddenly flexible brokers will only soften the deal.
This would seem worrisome to 111 West 57th, which is now almost complete after years of delays and legal bloodshed among its donors. Its units are sold from $ 17 million to over $ 50 million each. Sales have been slow.
However, when I started to pepper Stern with questions about the weak market, he pushed them away. His tower, with only 46 two-story apartments – each with their own claim to this extraordinary view – was not really subject to normal market forces, he said.
Its buyers were not either. “I don’t know if the barometers you use for the general market really apply here. That’s not it,” he told me in a living room designed to look like the model home of a A bottle of champagne rested in a silver ice bucket on an end table – probably because billionaires go home every night and drink.
None of us then realized that a new virus from central China was swirling outside the city. An ongoing market shift should accelerate in the coming days to become a real calamity. We were entering another era – one with its own dangers and assumptions – and we didn’t even know it.
Michael Stern is currently the most intriguing of this unique tribe of impetuous, visionary – and sometimes dishonest – men who built New York’s skyscrapers. We call them developers. Stern is only 40 years old. But over the past decade, it has taken its place alongside the heavyweights by constructing a series of buildings that have been both commercial and critical successes. New York developers have diverse talents.
Some are brutally economic, a la Fred Trump. Some are fairground, like his son, the president. There are buccaneers who evoke beauty on the brink of bankruptcy, like the legendary Harry Macklowe. Some excel in the dark arts of obtaining zoning permits. Others may enjoy tax benefits. Many are talented liars and seasoned litigators.
Stern, who has never attended university, is proud of his knowledge of construction and nuts. But he also has a taste and a sensitivity which can accelerate the pulse of an architect. “He ordered very good architecture,” said Daniel Kaplan, senior partner at FXCollaborative, the New York architectural firm. “The really interesting thing about him is that all the things people say you can’t do – or you can’t do for the money – he says,” Forget it! “”
Part of the fun of following Stern is not only watching to see what he will build next, but also whether he will fall flat. “He is one of those people who could crash and burn,” said another architect.
A person who has worked with Stern suspects that the young developer is ready to risk everything for glory. “He wants to be great. He wants to be Harry Macklowe, and he’s ready to go bankrupt several times along the way. “
Stern has piled up lawsuits. Two years ago, 111 West 57th was briefly pushed into foreclosure by one of its investors. A single partner accused him of forge his signature on loan documents. The young developer denies this and happily shakes everything up. “Litigation is inevitable in this case,” he told me. “If you are not being chased by people, you are not doing enough work.”
Stern grew up in an Orthodox Jewish enclave on Long Island, the son of a car store owner and a nurse, and was an average student. Instead of college, he went to Florida. “I think everyone who grew up on Long Island wants to leave Long Island,” he told me.
Although he does not spare the details, he says that he went to work on construction sites for a developer, to finally manage construction teams. It was in the late 1990s and the roller coaster housing market in Florida was experiencing a strong recovery. So when the workday ended at 3 p.m., Stern began building his own single-family homes on the side and flipping them over. “I would buy a house, I would drop it, I would build another,” he recalls. “The timing was good.”
In 2002 he returned to New York and began installing single family homes and small apartment buildings in the outer boroughs. It’s the same way that Fred Trump made his fortune. Part of the secret of this particular trade is the absolute economy: using features and accessories that can be repeated over and over, and minimizing the need for skilled labor at all costs.
Stern was actually shy – almost gentle – at the time, according to someone who had met him at the time. The New York real estate market was booming and it eventually joined David Juracich, an easygoing Australian expatriate who wanted to quit his job as a derivatives trader to join the developer profession. They made a strange couple: a tall and athletic, red-haired, who bears the nickname “Wavey Dave”; the other shorter, dark and slightly awkward.
Their first venture was not a resounding success. After months of tracking, Stern concentrated on a part of Brooklyn near the Gowanus Canal – a body of water so dirty that city engineers call it oily sludge “black mayonnaise“The neighboring districts were gentrified.
Stern felt they could buy a small parcel of land that had been approved for development, and then pick up two adjoining ones. Zoning rights would then pass through the entire assembly. This, in turn, would allow them to build a 14-story tower.
“He is an incredible speaker and he convinced me of that,” says Juracich. In early 2008, the partners dumped $ 1.6 million of concrete into the ground. Global financial markets quickly began to falter and credit became scarce. Without a construction loan, they were forced to leave the site fallow until the city ended up burying it – concrete and everything – for security reasons. Rather than giving up, Stern decided they should build in Manhattan. “He’s just moving forward,” says Juracich.
It happened the day Lehman Brothers failed when Stern visited the Verizon building, an unattractive wedding cake from a structure on West 18th Street in Chelsea that was full of engineers and telecommunications equipment. “I received a Google alert on my phone that the world was ending,” he recalls.
What intrigued him was the roof on which we stood then. The building overlooks the rest of the neighborhood – like a clumsy teenager – and thus offered a breathtaking view in all directions: near Midtown, then over the rooftops of Greenwich Village to the fortress in the city center, and even Brooklyn.
“Whenever I look at a building, I always go first on the roof,” he said, turning to admire the panorama. Stern enthusiastically climbed into a knit shirt that was casual but could or could not cost a fortune and Prada sneakers.
They negotiated the purchase of the building for $ 25 million. But it wasn’t easy: Verizon didn’t want to sell to a 29-year-old man who no one had ever heard of. Money was tight. Stern was stretched by the Gowanus debacle and his divorce. To whip up a $ 3 million deposit, Juracich mortgaged a rental apartment he considered his nest. “We accompanied investors day and night to try to get them in and no one saw them,” he recalls.
Perhaps it is because the conversion of a forbidden industrial building with few windows into luxury condominiums was a kind of Rubik’s Cube puzzle. The stairs at the corners of the structure should be removed to open the views. An industrial chimney should be dismantled. The windows were to be drilled through the brick. Verizon, meanwhile, would continue to occupy the first eight floors and couldn’t be disturbed.
But there were some things in favor of Stern and Juracich: because of the financial crisis, leading architects and craftspeople who might not have otherwise turned their calls down were willing to work with them. They saved money by suppressing the powerful New York construction unions, which make building the city very expensive by insisting on rules that prescribe, for example, how many workers must be available to operate a single elevator.
Stern and Juracich, now known as JDS Development, also won zoning authorization for four additional floors. That meant more square feet, more views, and more premium units for sale.
The finished building has a heavy dose of what Stern calls with a wink “Organized history“The lobby, for example, is brand new but made to look like an original art deco restored with love. In a movement between shameless and brilliant, they commissioned a historian to write an admiring book on Ralph Walker, the architect long forgotten about the building. (Its title: Ralph Walker: architect of the century.)
They even created a Ralph Walker exhibition in the hall of what was now known as the Walker Tower. “Believe it or not, tourists come in and out of the building to see the Ralph Walker Museum and buy the book,” said Kevin Maloney, a veteran New York developer now based in Miami, who partnered with JDS on the project.
In the story of Maloney, the outlines of the story are almost the same, except that Stern is not the only hero of Walker Tower that he is often made believe. Rather, he is an influential member of a large distribution – from architects to lawyers to the construction team. “Building a building is not a one-man show,” said Maloney, expressing wisdom that will certainly disappoint Ayn Rand fans.
One thing on which everyone agrees: the timing was fortuitous. When the 51 units of Walker Tower went on sale in 2013, the real estate market was turning and there was little inventory available. They ended up selling – not for the $ 1,800 per square foot that the developers budgeted for, but for more like $ 4,000 per square foot. The penthouse sold for what was then a downtown Manhattan record of $ 51.5 million. “It was a gamble that paid off,” said Stern in a rare understatement.
There was another windfall: they also bonded with Barry Sternlicht, president of Starwood Capital Group, the real estate private equity firm, which became an investor in Walker Tower. Just as architects were looking for jobs emerging from the crisis, private equity funds were eager to put their money to work. (“He got on the roof, walked for 15 minutes, then said to his guy,” Do it! “”, Juracich remembers).
Stern, who is a divorced father, lives in Walker Tower in the kind of New York apartment you find in bright design magazines. It has French-cut herringbone floors, an outdoor terrace and exposed steel beams. (These are originals but have been treated with intumescent paint at a cost of approximately $ 20,000 each). With his architecture and photography books arranged exactly like that on the shelves, I thought it was the sales unit before discovering that it was Stern.
For Stern, everything was flowing from Walker Tower. Verizon had a similar property in town that they sold to JDS, Maloney’s Property Markets Group and Starwood for another conversion. Her name is Stella Tower. He and Juracich returned and finished what they had started at Gowanus, now taking architects from Manhattan with them. They launched another condo project near the High Line high park in Manhattan: The Fitzroy.
Stern has also tried a moderately priced rental property on unloved land overlooking the East River. He and Juracich believed that the Murray Hill area was ripe for development with the growth of the United Nations and the nearby Langone Medical Center. They collaborated with Gregg Pasquarelli from SHoP architects.
The result is the American Copper Building, two 48-story copper-clad twin towers that will gradually turn green over time. They lean over but are joined by a three-story umbilical walkway that includes a pool, lounge and more breathtaking views. The skyway is not only whimsical: it also houses shared mechanics for the towers to improve efficiency. “It’s an incredible piece of architecture,” says Daniel Kaplan.
The Walker Tower also took them to 111 West 57th. Barry Sternlicht had narrow terrain across the street. It was perfectly centered on Central Park and only a few blocks south. But it was only 43 feet wide. He didn’t know what to do with it. He wonders if Stern and his partners might be interested.
They accepted it and began to design a 700-foot tower. Then the building next door arrived on the market. It was the Steinway & Sons Piano Showroom, built in 1925 and just opposite Carnegie Hall. Rachmaninov has already played it. A historic monument, the building has been protected from development. But they still bought it and, with Gregg Pasquarelli, went back to the drawing board.
Down the street, the first New York supertall had reached just over 1,000 feet. Known as One57, the building was a huge success for developer Gary Barnett, the head of development company Extell, who had spent more than a decade assembling access rights. Many of the units sold before the building was even completed in 2014. The penthouse alone grossed $ 100 million.
Barnett would soon pave the way for a suite on the same street: the 1,550-foot Central Park tower. The New York skyline was redesigned and 57th Street became Billionaires Row.
Supertalls inspire a range of feelings. Their creators tout them as natural heirs to the Empire State Building and the Chrysler Building, a new generation of skyscrapers that have shaped New York’s unique ambition. They would not be possible without the development of high-tech shock absorbers, which slow down the speed at which the towers swing. They are also the result of stronger concrete and a lot of research on wind tunnels to understand how to control gusts at such heights. (It turns out that the wind picks up after hitting a building.)
Others tend to view them as rude newcomers out of step with the rest of the city. In 2015, protesters black umbrellas moving along 57th Street to draw attention to the shadows of which they complained that the towers spanned the beloved public park. In our uneven times, they reflect the dizzying distance between those at the top of the world economy and those below.
The towers responded to a commercial imperative. The growing ranks of the world’s billionaires wanted property along Central Park. It was both a place to stay in the city and, more importantly, a way to take the wealth out of your own country and store it in the most liquid real estate market in the world.
The existing buildings in New York were generally old co-operatives, often reputed to know who can set up shop and request detailed information about the finances and lifestyle of a potential buyer. Supertalls didn’t care, as long as you could write a check. “There were a lot of pent-up requests from foreigners for a base in Central Park. This is why One57 has been so successful. It was the first, ”says Juracich.
If Walker Tower was complicated, 111 West 57th was another order of magnitude. The purchase of Steinway and then the air rights to a neighboring building allowed the team to go higher – exceeding 1,400 feet. But they should leave the iconic, largely intact piano room and build around it – without disturbing existing tenants. That meant boring 70 feet in the rock below with hand drills instead of heavy demolition equipment.
“They were selling and tuning pianos while we were working under them,” said Stern. Because they were building in one of the busiest places on earth, the assembly area for construction should be inside the building itself. For safety reasons, the crane could not operate when the wind speed reached 35 mph.
“It is difficult enough to build this in the desert without anything around you – but to build it in the urban context, through a landmark, without disturbing the existing occupants,” said Stern. “It was a war.”
Pasquarelli drew on the tapered “back” style that shaped New York’s skyscrapers after a Zoning resolution of 1916 qui était destiné à limiter leurs ombres dans les rues en contrebas – mais 111 pas en arrière, non pas en blocs mais en petits incréments, comme les lames d’une plume. Une toile entrelacée de terre cuite – pas de verre – a été utilisée pour la façade. Chaque pilastre est sculpté pour créer, à distance, une texture tourbillonnante, comme la peau d’un serpent.
«C’est un immeuble de New York. Ce bâtiment – si vous le déposez ailleurs, ce serait inapproprié », a déclaré Stern. Il avait également restauré le bâtiment Steinway adjacent, dans le cadre de l’accord visant à obtenir l’approbation de la commission de préservation historique de la ville. Qu’est-ce que ça fait de regarder son propre gratte-ciel, ai-je demandé? Nous étions debout sur la 57th Street, la tête inclinée vers le haut. “F ** king crazy”, répondit-il.
La beauté de la tour avait a pris du temps, ce qui a eu un prix. Lorsque les partenaires ont ouvert la voie au début de 2014, le plan était de l’achever en 2017. Ce délai est venu et a disparu. Il fallait plus d’argent et un enchevêtrement de poursuites parmi les investisseurs s’en est suivi. Bien que les détails du litige soient baroques, une personne familière avec la situation se résume à un simple fait: “Le problème est que nous avons trois ans de retard.”
Les retards sont mortels pour les développeurs. Ils ont toujours les frais de port chaque mois des paiements d’intérêts, des salaires et des taxes foncières, mais sans aucun revenu entrant. Pour 111 West 57th, le plus grand coût des retards était que, dans les années intermédiaires, le marché a changé. Il a été inondé par une offre excédentaire de propriétés de luxe tandis que les tensions politiques ont poussé les acheteurs chinois et russes hors du marché de New York. “Les Américains sont les riches maintenant!” Juracich ironise.
Au cours du premier trimestre de 2018, les prix des appartements de luxe à New York ont chuté de 15% par rapport à la même période un an plus tôt, selon les recherches du courtier Douglas Elliman. Le nombre de ventes a chuté de 24%. Extell et d’autres développeurs ont commencé à renoncer aux frais pour les casiers à vin et autres équipements, et même à permettre aux acheteurs potentiels de louer en propriété – le tout dans une tentative effrénée de déplacer l’inventaire.
Après avoir recruté de nouveaux investisseurs, Stern et ses partenaires ont tout mis en œuvre pour tenter de vendre le 111 West 57th. Ils ont construit une salle d’exposition somptueuse qui présentait une maquette à grande échelle de l’une des unités. Je l’ai visité en juin dernier pour entendre une conversation publique avec Pasquarelli et Bill Sofield, qui avaient conçu l’intérieur du bâtiment, y compris des poignées de porte en laiton spécialement moulées pour imiter le recul à plumes de la tour.
La salle était pleine d’architectes, de publicistes, de courtiers et d’autres dont le travail consistait, d’une manière ou d’une autre, à enthousiasmer les milliardaires du monde à propos d’un condominium particulier.
Vendre un appartement de 45 millions de dollars n’est pas tout à fait comme vendre un appartement de 3 millions de dollars. Il ne s’agit pas seulement de réduire le prix jusqu’à ce qu’un grignotage devienne une bouchée. C’est autant une expérience émotionnelle que financière. Toutes les querelles juridiques entourant le 111 West 57th n’ont pas aidé, a déclaré un courtier de New York, qui m’a expliqué qu’une vente d’immeuble de luxe devrait être aussi ordonnée et étroitement orchestrée qu’une offre publique initiale. Tout ce qui nuit à l’aura du succès doit être évité.
It did not help that in May 2018, the Manhattan district attorney’s office charged one of the construction companies working on the building with stealing wages from its immigrant employees. Stern notes that it was a subcontractor, and prosecutors said there was no evidence that JDS was aware of the matter. But Gary LaBarbera, the politically astute head of New York’s builders’ union, delighted in portraying Stern as a sort of unscrupulous developer, exploiting non-union workers.
As the new year dawned, Stern and his partners had sold fewer than a quarter of the tower’s 46 units. But with potential buyers now able to see the completed building, sales began to tick up. While not the score of a lifetime, 111 West 57th would still be lucrative. Then came coronavirus.
When I spoke to Maloney in mid-March, New York City had not yet been shut down but those with means were already fleeing to second homes in the Hamptons or boarding private jets for Florida or Aspen. Maloney himself had cancelled a trip to New York. The market was tanking. Margin calls were being made and fortunes being lost. JDS was no longer showing 111 West 57th to prospective buyers.
The New York governor would soon shut down all but essential construction work. Was it possible, I asked, that the tower — for all its wonder — might not yield a profit? Maloney repeated the question and thought it over. “Who knows?” he said finally, sounding more intrigued than upset. “It’s all going to unfold.”
Two weeks later, it seemed to be unfolding for the worse. “The sky has fallen,” Frances Katzen, a luxury property broker in New York, told me. Her clients were in quarantine.
There is what is known as an “outside date” in standard property sales contracts. If a building is not completed by that date, then buyers can reclaim their deposits and walk away. That then threatens a cascade of misery, with financial targets being missed and lenders potentially calling in their loans.
At 111 West 57th, the outside date is looming. And so, coronavirus be damned, the developers raced this week to complete their first “virtual” closing on Wednesday, “by the hair of our chin,” as one put it, even though a fidgety, $20m crown that is beloved of architects — and the bane of engineers — has not yet been fixed atop the tower and the external hoist is still attached.
Doing so should assuage Apollo Global Management, the colossal New York hedge fund that holds much of 111 West 57th’s debt. If they falter, then Apollo, which declined to comment for this article, could show mercy. Or it might conclude that there is more money to be made by wiping out the equity holders and taking the spoils for itself. “It’s all touch-and-go,” a person involved in the project says. “It’s the same with a thousand buildings in the city now.”
Ultimately, the success of 111 West 57th, and so much New York real estate, may depend on how long the city remains shuttered, and what sort of world is there to greet it when it eventually reopens. After surviving a pandemic, will the world’s billionaires still desire impossibly slender trophy flats in the Manhattan sky? Will they still be billionaires?
Stern sounds as chipper as ever. Through his publicist, he insisted his tower would still come good. I thought back to our conversation in early March, in what now seems like a different era. I had been boring the visionary developer with narrow and repetitive questions about the state of the luxury property market until eventually he shrugged me off. “Money isn’t everything,” he said.
Joshua Chaffin is the FT’s New York correspondent
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