What Went Wrong at Astor Place?

The project seemed blessed. The wedge-shaped site at 445 Lafayette Street, behind the Astor Place cube and next to Cooper Union, had been a parking lot for decades, awaiting its moment. A project involving Ian Schrager, Rem Koolhaas, and (maybe) Frank Gehry had fallen through. And then came the Related Companies, fresh off the Time Warner complex at Columbus Circle, which remade a dead spot into one of the priciest corridors in midtown.

For Astor Place, Related hired architect Charles Gwathmey, who delivered plans for a beguiling amoeba-shaped building. Everyone expected success. It’s at a key downtown intersection, one that screams for its own Flatiron Building. From the north, the tower could look like a Brancusi set against the sky—and the building’s prospectus carried the slogan SCULPTURE FOR LIVING. Within days of the opening, 11 of its 39 apartments were poised to go into contract.

Nearly two years later, Astor Place is not sold out. It’s not even close. A Wall Street Journal article in April claimed that only one apartment had traded since last fall. In a market that’s been gobbling high-end apartments, it has the scent of a failure or, at best, not a winner. So how did the “It” building lose its gloss? Who, or what, killed Astor Place?

THEORY NO. 1: Paul Goldberger did it.
In May 2005, the New Yorker architecture critic and Parsons dean published a column in which he declared that the emperor had no clothes. It was a rebuke so stinging that real-estate people still lower their voices when referring to it. Preservationists had scorned Gwathmey’s wavy design from the beginning—no surprise there. But most everyone else had high hopes. Goldberger cut them down, calling Astor Place “an elf prancing among men” with a “garishly reflective” façade channeling not Mies but Trump. (He did admit to liking the interiors, calling them “assertive, sensual spaces that evoke the classic modernist houses of Le Corbusier.”)

From there, opinions started to turn. “It’s very aggressively designed. It ill-serves the neighborhood, and vice versa,” says one high-profile real-estate executive. Critics have been toughest on the greenish-blue glass shell, which gives the building a peculiar office-building vibe. (Goldberger likened it to the stuff of suburban office parks.) Assembled from flat panels rather than smooth custom curves, it looked a lot better in renderings than on the street.

That commercial quality got even more pronounced when a Chase bank branch took over the ground floor. Why not a restaurant, a gallery, something subtler? Or at least not so brightly lit? (Because a bank is the world’s easiest tenant. It produces no noise, no odors, no real trash, no late-night activity.) The funky shape also means that some apartments’ layouts are eccentric, and not everyone loves the finishes. “I don’t think people like fluorescent lights in their multi-million-dollar kitchens,” sniffs one high-powered agent. Then “there’s the privacy issue,” he says. “You either have to draw your shades or be in really great shape.” Says a developer: “If you put up curtains, what’s the use of having the glass?”

THEORY NO. 2: Blame the lawyers, and the landlord.
If it wasn’t the design snobs, then who else? Perhaps Cooper Union—indirectly, anyway. Instead of selling the land under 445 Lafayette to Related, the school opted to lease it for 99 years. That meant Astor Place had to be a co-op rather than a condo (though it’s technically one of those hybrids called a “condop”—that is, a co-op with condo rules). “The downtown buyer is a condo buyer. Are they buying co-ops? Yes, but reluctantly,” says Kathy Sloane of Brown Harris Stevens. “I had several customers I wanted to put there, but when they found out it was a co-op, they said absolutely not,” says one of her colleagues.

A land lease makes the building ineligible for certain abatements that keep real-estate taxes down. It also boosts monthly charges, because residents have to cover the ground rent. A tenth-floor 1,449-square-foot two-bedroom at Astor Place, for instance, has monthly fees in excess of $2,800; the Manhattan average, says appraiser Jonathan Miller, is $1.50 per square foot, in this case $2,173. (Moreover, the building’s taxes will rise 20 percent in July.)

Land leases also tend to scare off buyers, because real-estate lawyers often flag them. Why? If a building’s ground lease comes up for renewal, your monthly fees could spike overnight, and even if that’s deep in the future, buyers are often counseled by their attorneys to think about when they’ll be selling. (Never mind that few buyers will be around by 2090, when it’ll start to matter. Lawyers are paid to bring up that stuff.) “With the amount of inventory on the market, about 10,000 units in the next year, any attorney would say look for a condo,” says a broker who has shepherded numerous construction projects.

Still, co-ops make up much of the city’s housing stock, and they allow the privacy-obsessed wealthy to hide their tracks, so why should the project be a harder sell? To make up for the higher monthlies, a co-op will usually cost less than other similar projects. Yet 445 Lafayette’s apartments are premium-priced, at roughly $2,000 per square foot. (That two-bedroom apartment, for instance, goes for $2.495 million.) Miller says Astor Place came up at a function he recently attended, and brokers unanimously agreed that it was too expensive: “It’s a nice project, but at that price point it’s meeting resistance from buyers.” (If it dropped the prices 20 percent, says a rival developer, Related could cash out and call it a day.)

THEORY NO. 3: It’s not an East Village building.
“They designed a glass curtain wall in the East Village,” says one broker flatly. “A buyer in the East Village is not a glass-curtain-wall buyer. They buy apartments that are edgier but warm, that have more historical detail.”

Contextualism is tricky. It doesn’t require that a building vanish into its surroundings, but it does mean a structure has to fold into the mind-set of its potential buyers. Old-school Upper West Siders can see themselves in the Zeckendorfs’ block-long 15 Central Park West, and it’s selling fast. Richard Meier’s towers, though pushing the envelope, still resonate among a subset of design-savvy West Villagers who envision a home full of hypermodern—or retro-modern—furniture. (Though the last of the triad, 165 Charles, is moving a lot more slowly than its forebears; more than a year after presales began, dozens of apartments are still empty.)

“Who’s going to spend $5 million there?” says a broker. “I’ll have skateboarders outside my window.”

The people who do buy in glass towers, on the other hand, still think of the East Village as “not the greatest place in the world,” as one developer put it. “For a drink maybe, but to live there?” Another broker who works with developers both uptown and downtown asks, “Who’s going to spend $5 million there? If I’m spending that money, I’m not living on Astor Place. I’ll have skateboarders outside my window and the subway underneath me.”

A comparison can be found in 21 Astor Place, a library that Elad Properties converted into luxury lofts in 2003. It was a hit, though they did have to split a big penthouse into three apartments before it sold. The project was ambitiously priced—Elad asked a then-unheard-of $1,000 per square foot—but its 60 units sold in six months. “We kept period details and married them with contemporary design,” says Richard Cantor, who marketed the building.

THEORY NO. 4: The glass-tower boom has made buyers choosier.
None of these issues would probably have mattered a couple of years ago, when slapping a starchitect’s name on the sidewalk shed and loading the building with amenities would’ve been enough to lure buyers. It’s too soon to use the word glut, but there’s a lot more product on the market now. That means developments have to hit all their marks, says Warburg Realty’s Richard Steinberg. They have to be well designed, innovative, and, as the truism holds, in just the right location.

“You can’t just throw a dart on a map and build,” a local developer says, sounding a little wistful. “Buyers are more conservative.” They’re also more sophisticated, says broker Michele Kleier. “Three years ago, people didn’t care if the rooms were small or if the floor plans didn’t work. Now they care.” Identifying the audience is key, and it needs to happen early. “The first thing we ask is who the buyer is,” explains Shaun Osher of CORE Group Marketing, a firm working on several new buildings. “Either the product resonates with them or doesn’t.”

Fifteen Central Park West certainly has. In seven months, the Zeckendorfs have sold more than $1 billion worth of apartments—it took Time Warner five years to reach that level, though it did have many more units to unload—and the sales push is winding down. The Plaza, unsurprisingly, is a winner, as is André Balazs’s 40 Mercer.

Interestingly, of the more than a dozen brokers and developers interviewed for this article, few had anything negative to say about those buildings. Yet many griped about Astor Place. (Maybe a few too many. People do throw stones at glass houses, especially those claiming to be Sculptures for Living.) “All of a sudden, these developers are learning they should talk to brokers. We are the eyes and ears of the buyers,” says one extremely successful agent. Revenge, apparently, is a dish best served in a cooling market.

THEORY NO. 5: It’s not actually bombing at all.
Though everyone seems eager to take potshots, Related may get the last laugh. According to David Wine, Related’s vice-chairman, the rumors are wrong: The original financing is paid off, and only a quarter of the apartments are unsold. The last of the four penthouses is just now coming on the market for $12 million, and as of press time three offers are on the table. And the Journal story saying almost nothing’s moved for six months? One apartment, says Wine, sold a few weeks ago to a friend of a resident, who came by to visit and loved it. Another two just went into contract. “[It’s] a very big financial success,” he declares. “And then some.”

He also claims that the leisurely sales pace is a strategy. “As prices go up, you don’t want to sell too quickly because you don’t want to leave too much money on the table,” he says. The last unsold apartment in Time Warner took five years to find a buyer, and it went for $16.95 million, nearly twice what it would’ve at the beginning. (“We rejected seven offers on that apartment, too,” Wine says. “We knew it was worth it.”)

However hard he’s spinning, it’s true that quick sales have only recently become a mark of success. “In the mid-1980s, two and a half years [was] a typical cycle, and most of the sales happened when the building was nearly done,” remembers Jonathan Miller. Now, if you’re not done within months, “the perception is it’s a dismal failure.” Besides, this class of buyers can afford to shop slowly. “People looking for $6 million apartments aren’t renting a junior four with a baby in a dining room and need to buy quickly,” Wine says.

So is it a flop or not? Most likely, Astor Place is just a highly visible casualty of a leveling market. It’s neither a disaster nor a smash hit, and has been snagged on high expectations and a catty rumor mill. Maybe it’s priced a little too ambitiously, maybe it’s just at the top edge. Wine admits they “bit off a huge challenge. But … you either can panic or you can believe in your product.” When all is said and done, Wine may be left not with a Brancusi, not with a landmark, not with an icon—but with an expensive apartment building out of which he’ll make quite a few million dollars. There are worse places to be. Next: The Cheapest Apartment in Manhattan

What Went Wrong at Astor Place?