A new super-tall tower will rise along midtown’s so-called Billionaires' Row now that the project’s developers have secured a $725 million construction loan for the $1 billion spire.
A partnership between JDS Development and Property Markets Group has received financing from AIG and Apollo Global Management to build 111 W. 57th St., a 1,438-foot-tall tower that will be the tallest residential building in the Western Hemisphere when it is completed in 2018.
AIG is the senior lender, while Apollo is providing a mezzanine loan. The size of each loan could not be determined, but construction loans are generally as high as about 60% of a project's value, which would put AIG's debt at about $600 million and Apollo's mezzanine loan at about $125 million.
Neither JDS nor PMG would comment on the deal.
The developers began work on the spire last year, pouring its foundation and renovating an existing building that it is preserving on the site and incorporating into the new tower. The project is often informally referred to as the Steinway Tower because the ground floor of that existing property has a landmarked interior that was the former showroom for the piano maker Steinway & Sons. That space, which features an ornate domed ceiling and marble columns, will serve as part of the retail space in the new tower.
Now that the loan has been secured, the developers will begin erecting the SHoP Architect-designed 111 W. 57th St. in the coming weeks. The building will be a mere 60 feet wide, making it dramatically slender even among a new crop of pencil-thin condo spires. The exterior of the tower will feature a distinct stepped spire resembling a tilted deck of cards.
The city’s ultra-high-end residential market has been heating up. In recent weeks, The Real Deal reported that a Middle Eastern buyer was in talks to purchase the upper portion of 220 Central Park South, a new condo tower being built by Vornado Realty Trust just a few blocks from 111 W. 57th St., for a record $250 million.
The strong sales and eye-popping sums have, at least for the time being, allayed concerns in recent months over a glut of multimillion-dollar apartments in the coming years and whether there will be enough buyers for the influx of inventory. A total of about 13,000 new condo apartments will be built through the end of 2016, most of which will be priced at least $3,000 per square foot, according to Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel.
"To me, the question that will determine the success of these projects now is how long it will take for buyers to absorb all of these high-priced apartments," Mr. Miller said. "Billionaires' Row is really a whole new market, it’s not an extension of anything we’ve ever had before."
JDS and PMG's loan expires in four years, giving the developers time to sell the 60-unit 111 W. 57th St. Sales for the tower are expected to begin in the fall.
The developers have a good track record when it comes to selling high-end apartments. They converted a former Verizon-owned structure in Chelsea into a luxury building, known as Walker Tower, that became one of the city’s best-selling residential projects in recent years. Separately, JDS recently closed on a $390 million construction loan for a pair of rental towers it is building at 626 First Ave.