Top Exec Quits, Costs Soar to $2 Billion on Long-Delayed Waldorf-Astoria Condo Conversion
Turmoil continues for the highly anticipated condo conversion of New York City’s Waldorf Astoria, a project in the works since 2015. In early May, a top executive for the development company in charge of the conversion abruptly quit, leaving behind no successor. Concerned about the project’s skyrocketing costs, which now exceed $2 billion in construction expenses alone, Dajia CEO Andrew Miller abandoned the ill-waited project as it extends into its seventh year.
Stretching across an entire city block from Park Avenue to Lexington Avenue and from East 49th Street to East 50th Street, the iconic 47-story hotel has been shuttered since 2017, when work on the conversion was expected to commence. The storied building, which opened in 1931, hosted every US president from Herbert Hoover to Barack Obama and originally had more than 1,400 rooms. Nicknamed “New York’s Unofficial Palace,” common areas and rooms at the Waldorf Astoria boast many elegant Art Deco touches, including antique bronze hardware, herringbone wood floors, custom cabinets and marble vanities; some even feature private outdoor areas.
Originally slated for completion by early 2021, the long-delayed condo conversion project is expected to drag well into 2024. The original developer, Chinese firm Anbang Insurance Group Co., purchased the property for $1.95 billion in 2015. When combined with the more than $2 billion invested into the project since then, the total cost now exceeds $4 billion, making it very over-budget and causing significant concerns for investors and other involved parties.
Delays on the project extend back before the pandemic. In February 2018, the Chinese government seized Anbang as part of its crackdown on companies acquiring foreign assets. Around the same time, the company’s CEO, Wu Xiaohui, was sentenced to 18 years in prison for defrauding investors. Anbang remained under government control for the next two years – right around when the pandemic began. Sales launched in March 2020, just before Covid began its assault on the city. At the time, studio units were listed for $1.7 million, and four-bedroom condos started at $18.5 million.
The property’s sales gallery was shut down just two weeks after opening. From there, the pandemic swept across the city and world, causing colossal supply chain issues and a mass exodus of foreign investors. In turn, construction costs began skyrocketing and are still inflated today.
When the pandemic started waning, war broke out in Ukraine, inflation rates hit four-decade highs and mortgage interest rates shot up. These and other factors affected the hotel-to-condo conversion of the Waldorf, extending the timeline and increasing the overall price tag even more. With the total cost for the project now over $4 billion, it is easily one of the most expensive hotel-to-condo conversions in history.
Since the conversion project started, NYC’s luxury housing market has experienced a rollercoaster ride of sorts. In the immediate wake of the pandemic, as New Yorkers fled the city for more spacious homes in less crowded areas, landlords across the city scrambled to stay afloat, offering reduced rents and various concessions. The housing market suffered too, with sales plummeting for the first half of 2020.
Fast-forward just two years later, and sales and rental market conditions couldn’t be more different. Rent prices across New York City have soared quickly, with rents for Manhattan apartments increasing by more than 40% in the space of a year. With new construction stunted by rising costs, labor shortages and other issues, inventory levels are also near record lows. Simultaneously, demand for luxury housing has shot up considerably in 2022, making it a prime time for units at the Waldorf to become available finally.
Unfortunately for developers and investors behind the conversion, it doesn’t look like the property’s new condos will be ready any time soon. Sources state the situation has been exacerbated by delays caused by the architect, Skidmore, Owings and Merrill, the firm behind One World Trade Center.
Once the property becomes available, rebranded as The Towers at the Waldorf Astoria, it should be regarded as one of the most iconic residential addresses in the city. The conversion project will add 275 luxury condos to the iconic building, which will also boast 350 renovated hotel rooms. Residents of the condos will have separate entrances and amenities, including the Starlight Pool overlooking Park Avenue.
Jean-Louis Deniot is handling interiors for the condos and residential amenities while Pierre-Yves Rochon is designing interiors for the hotel’s public areas. Initial pre-demolition work was completed in 2016, and renovations are being performed on parts of the hotel that were designated as historic landmarks in 2013. These areas include the West Lounge, originally Peacock Alley; the Grand Ballroom and balconies on the third floor; and the lavish Park Avenue lobby, which includes a floor mosaic by French artist Louis Regal and 13 murals.
Residents of the luxury condos at the Waldorf Astoria in Manhattan will enjoy private access to more than 50,000 square feet of amenities. In addition to the aforementioned Starlight Pool, amenities include a sprawling winter garden with landscaped grounds, a theater with performance space, four private bars, a fitness center, private spas and a children’s playroom.
It is unclear who will serve as the successor to Miller, who abandoned his post as CEO of Dajia this past spring. Dajia US has been managing the assets of the original developer, Anbang, since the government takeover. With construction expected to continue well into 2024, residents most likely won’t be able to start occupying the building until at least 2025.
Despite the long-delayed progress of the Waldorf conversion project, units in the building are sure to fly off the market quickly once the dust settles. Unless the city’s luxury housing market shifts considerably over the next few years, units at the property – including two penthouses – are apt to sell for far above the original range of $1.7 million to $20 million. As soon as more information is available about purchasing luxury condos at The Towers at the Waldorf Astoria, BCP Real Estate Group will be here to bring you up to speed.