Even the Home of Eloise Isn’t Immune to the Condo Craze
When the Plaza hotel opened in 1907, the cheapest rooms went for $2.50 a night, $4 with a bath, and some suites cost an astounding $25. But the steep prices seemed justified, given the location at Fifth Avenue and Central Park South, next to the mansion of Cornelius Vanderbilt II, and what it had cost to build the castle-like hotel with the stunning chandeliers -- $12.5 million.
Nearly a century later, that’s about what it will take to get in the door after most of the rooms at the Plaza are converted into condominiums.
“I’m not saying I won’t have a couple buyers at $20 million to $40 million, but the majority will be $5 million to $10 million,” said Mike Naftali, president of Elad Properties, which is shutting the famous hotel April 30 to begin the $350-million conversion.
The lower-priced condos will be small by neighborhood standards, 1,000 to 2,000 square feet, nothing like the mammoth places that have drawn record prices in the Time Warner Center. But that’s “new construction,” Naftali points out -- the sort of glass-tower environment likely to draw new money, while the 200 condos in his “very romantic” property will be pitched to draw the old-money crowd out of their Park Avenue and Fifth Avenue pads.
The condo conversion craze has been spurred by rising real estate prices, with the average cost of units cracking the $1-million mark in most of Manhattan last year. Developers have been seeking to transform all sorts of commercial properties, but hotels have been a favorite because the owners can deliver empty buildings -- there’s no need to deal with residents holding long-term leases.
“In the last year, a dozen hotels have been [converted],” said John Turchiano, communications director for the New York Hotel and Trade Councils, the union most affected by the trend. “The Olcott, the InterContinental Central Park South, the Mayflower.” He listed a few more, then said: “But this is the Plaza. So as far as I’m concerned, this is unique.”
The hotel has been a setting for scenes in books and movies such as “The Great Gatsby” and “Eloise at the Plaza.” But to the 25,000-member union -- which has lost 1,076 jobs to condo conversions in the last year -- its significance is as the site of an additional 900 precarious jobs, many of which pay sums that people beyond the Manhattan hotel scene might find hard to believe.
Forget the $100,000-plus that the uniformed doormen take in. Union officials say veteran banquet waiters can earn $200,000, thanks to the generous tips written into all special-event contracts.
“We have a lot of guys that make a lot of money,” said maintenance mechanic Ben Cooley, whose 26 years on the job are not unusual for the hotel’s workforce. An electrician still has the autographed photo Paul McCartney gave him when the Beatles were guests in 1964.
“They feel that this was a place they would be able to stay and retire,” Cooley said of his co-workers, who know it will be hard to find jobs at their current pay.
The flip side of that is the contention by the Israeli development company that bought the Plaza last year for $675 million -- $838,000 a room -- that such labor costs make it unfeasible to maintain the place as a 805-room hotel. Elad Properties is planning to have a 150-room hotel when the Plaza reopens at the end of 2006, and those rooms will be along 58th Street, not on the choice park-view side.
Naftali said the downsized hotel would operate with about 150 employees. Current workers have been offered two weeks’ severance pay for each year of service.
The hotel is “still perceived by many people as the best in the world, [but] if you look at the business plan, the Plaza [has been] losing money for many years,” Naftali said.
The hotel union is trying to pressure the company to scale back on the number of condos. Union President Peter Ward -- whose own wedding party was in the Plaza ballroom -- said the developers could make a $400-million profit on their purchase if they converted only the top quarter of the 16-story structure and left the rest as a hotel.
But in the current real estate market, Naftali sees no end to the condo conversions around the city. “Every rich person in the world,” he insisted, “will consider the Plaza as one of the places they want to own an apartment.”
It was hard to tell last weekend that the Plaza might be in its final days.
The corridors were packed. Tourists from Indiana listened to a classical guitarist while waiting in line for the Sunday brunch crowd to clear out and afternoon tea to begin at the Palm Court. Others gawked at the Seattle SuperSonics basketball players, in town to play the Knicks, or headed to the gift shop, where they sell Eloise picnic baskets for kids and etiquette books for adults. The saleswoman said there would be no closeout on the $90 bathrobes: “We sell huge amounts without marking them down.”
But there were deals to be had at the jewelry shop, though the proprietor would not say whether the 50% off applied to a $250,000 diamond ring in the window. He did offer antique display cases, now empty, for $750.
And around the corner, longtime customers were commiserating with the bartender in the Oak Bar.
“I had to say goodbye,” said Joyce Lionetta, who was a regular while living for decades in the city and who continued to come to the Plaza after she and her husband moved to Connecticut.
On bar stools next to the Lionettas, who were nursing $16 martinis, were another Connecticut couple who had their first “overnight date” at the Plaza 20 years ago.
Rick Platt said he worked with real estate investors and had sympathy for the capitalist creed that “if you buy it, you can do what you want with it.” But it depressed him that the bartender and others might soon be without jobs. Still, Platt was intrigued by the plan to take the old hotel condo
“The reality is, we’d love to live in the Plaza,” he said.
