The numbers behind the soaring Vornado tower, which is set to rake in $1B despite a slump in the luxury market and other hurdles
Another day, another multimillion-dollar purchase at Vornado Realty Trust’s ultra-luxury tower 220 Central Park South.
With the final 27 apartments at the 118-unit building reportedly under contract, Vornado CEO Steve Roth seems to have struck gold with his Robert A.M. Stern-designed tower.
The cherry on top came early this year when hedge funder Ken Griffin bought a penthouse in the building for $238 million, shattering New York’s residential record for priciest residential sale (by a mile) and becoming the second priciest residential sale on the planet.
The success comes even as the rest of New York’s luxury market has been struggling and concerns about the resale prospects for luxe pads on Billionaires’ Row mount.
“They are printing money on this. It’s a highly successful deal,” Alexander Goldfarb, an analyst at Sandler O’Neill, told The Real Deal late last year.
Roth has taken an unusually hands-on approach to screening buyers, reportedly asking questions about their political views and backgrounds.
Back in 2016, Compass President Leonard Steinberg described the process as “reminiscent of a co-op board interview” noting “that which is not available to everyone is the thing people want most.”
So far, the theory seems to have proven true.
Though most buyers at 220 CPS used LLCs to mask their identities, a handful — including billionaire Dan Och, Sting, Stonehenge Management’s Ofer Yardeni, Brazilian construction heiress Renata de Camargo Nascimento and developer Albert Behler — signed with their real names.
The Vornado project has been 14 years in the making and involved an all-out real estate war with rival developer Gary Barnett.
Here’s a look at Vornado’s tumultuous-but-ultimately wildly successful journey from a hole in ground to record breaker.
The amount Vornado shelled out in 2005 for the 20-story building that once stood at 220 CPS. It took five years and another $40 million to clear it of tenants. But Gary Barnett, who owned the building’s garage, held out for three more years before selling Vornado an adjacent site for $193 million that Roth needed to proceed. That sale finally cleared the way for the tower.
The total projected sellout of the tower versus the $1.4 billion total construction cost on the project. Vornado took on $1.1 billion in debt for the project, and the company is expected to rake in about $1 billion in straight-up profit on the tower.
9M sq. ft.
The size of Vornado’s holdings around Penn Station. The REIT plans on deploying its profits from 220 CPS into its Penn Plaza overhaul, which includes One and Two Penn Plaza, plus the mega-renovation of the Farley Post Office.
The price Michael Dell paid for a penthouse at Extell’s One57 right down the street — which was the priciest residential sale in Manhattan until Griffin’s $238 million purchase. “I’m guessing that this is the most successful apartment project ever, anywhere,” Roth said on an earnings call shortly after the Griffin sale closed.
The year that news reports indicate that Corcoran Sunshine Marketing Group landed the gig to sell 220 CPS, one of the biggest new development gets in history. Sales have been headed by Corcoran’s Deborah Kern, who handled the Griffin deal for Vornado. (Douglas Elliman’s Tal and Oren Alexander represented Griffin.)
The value NYC assigned to Griffin’s penthouse, an amount that drastically shrinks his tax bill. According to the Wall Street Journal, assessors look at rental income at nearby buildings to determine values. “It is a crazy system,” former city finance commissioner Martha Stark told the paper. “The true market value bears no relation to sales price.”
The number of stories the 79-story 220 CPS was initially planned at. In 2012, Roth hinted at the reason for the increase in a shareholder letter: “We hear that the 1,000-foot tall, direct park-view apartment tower under construction on 57th Street is pricing at $6,500 per square foot,” he wrote, referring to One57. “Our 220 Central Park South site, just down the block, is better.”
The number of Midtown luxury apartment resales — including those on Billionaires’ Row — where buyers took losses between 2014 and 2018. That compares to a citywide average of 7.7 percent. Some of those discounts were logged at such trophy towers as One57, 15 Central Park West and 432 Park.