Manhattan Real Estate: The Plaza Hotel Sees Dropping Unit Costs and Rising Hope

The down market is affecting prices across the board and even classic historical landmarks like the Plaza Hotel are not immune to dropping prices. They may even be feeling the recession more acutely than other properties, as their value rose after Isaac Tshuva’s $675 million purchase of the hotel and subsequent revitalizing of the property to the tune of $450 million more. After selling out all units sight-unseen, the resale values have been dropping drastically over the past two years. Rebecca McAlpin wrote a timely article for The New York Times about New York’s storied Plaza Hotel that digs into the dropping property values and reasons for hope.

Photo Credit: wallyg

Units are losing value but occupancy is up recently to above 90%

Manhattan Real Estate: Spotlight on the Plaza Hotel

In 2004, all 181 units sold sight unseen for a total of over $1.3 billion. If you remember, prices were high enough that firms were separating sales figures from the Plaza because they skewed the market. The idea was to create a luxury condo tower for the world’s wealthiest tenants with a collection of high-end stores and restaurants below them. The market has not played nice. The emblematic Palm Court Hotel has been closed since December of 2008 and the last 11 luxury condos have sold at a loss. Unit prices are dropping dramatically, and the article lists losses on recent sales from over $700,000 up to $8.5 million. And 9 of the 28 apartments in the Plaza currently on the market have drastically cut their asking prices.

Plaza executives see reasons for hope, though, noting that both unit costs and event bookings have followed general trends and 2010 is looking good. Occupancy rose to over 90% in December of 2009, indicating that people are  buying the units. The Plaza is predicting a 30% rise in wedding bookings for 2010 and they earned their first ever 5 Diamond rating from AAA.

In the end, the Plaza Hotel is a tale of what happens to a property that went big at the height of the real estate bubble.  High hopes and high prices dropping in a volatile market.

Will Eloise still be proud to be at the Plaza? Only time will tell that story.

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