One Madison Park- Buyers Rough It In Condo Tower Left Unfinished

Data-

One Madison Park, Formerly known as The Saya. 2006-10
20 East 23rd Street
Architect: Cetra/Ruddy
Developer: Slazer Enterprises

By JOSH BARBANEL, WSJ, JUNE 13, 2011.

Every day a hardy band of pioneers enters a luxury tower in New York’s Flatiron neighborhood through a narrow opening in a wall of blue plywood and scaffolding on 23rd Street, like patrons of a peep show or a late night underground club.

One Madison Park was nearly sold out before the financial crisis hit. (Andrew Burton)

They fret over when, if ever, a new swimming pool and spa will open, along with a permanent entrance of black marble planned on a quiet side street.

The unfinished, 597-foot-tall tower of glass overlooking Madison Square Park stands as a ghostly monument to the soaring ambitions and excesses of the Manhattan real-estate boom. Work on the building slowed at the end of 2009 and ground to a halt in February 2010 after the development ran out of money and the lenders moved to foreclose. It’s not clear when work will resume.

Yet its inhabitants remain remarkably upbeat about the building, their investment in it and the future of a neighborhood that is in the midst of a transformation from commercial strip to upscale destination.

“The view is to die for,” said Diane Stern, looking out of the tinted glass walls of her $1.5 million one-bedroom apartment at the rows of red taillights streaming up Madison Avenue. “You have the Empire State Building smack in front of your face. At night we turn the lights off and it is like looking into a wall of photographs.”

Ms. Stern is one of a dozen buyers who closed on apartments in the slender tower known as One Madison Park, before construction halted (Andrew Burton).

‘The view is to die for’ at One Madison Park, says Diane Stern.

In the meantime, as they wait for their building to come back from the dead, the residents don’t pay any common charges, which would otherwise run up to $2,000 a month, several owners said.

They don’t have to worry about support staff, either. Before the foreclosure filing the developers hired doormen, porters and a maintenance staff for a building with 69 apartments, and the staff have been kept on since.

“There are a dozen employees for 12 apartments, said Edward H. Braun, the first buyer to close on an apartment.

Mr. Braun, the chairman and retired chief executive of high-tech manufacturer Veeco, paid $2 million for a two-bedroom apartment on the 11th floor as a second home.

On some nights, he said the glass tower is entirely dark, except for “one or two of us in the building.”

He said that despite his disappointment and frustration, he takes comfort in the building itself and the neighborhood. “It is beautiful,” he said.

Ms. Stern runs a home health-care agency and spends much of her free time raising funds for a program, Soul Uganda, run by her 25-year-old daughter to help impoverished villagers in Uganda. She paid $1.5 million for a small one-bedroom.

Other owners include Peter Buffett, a musician and son of investor Warren Buffett. The younger Mr. Buffett paid $3.5 million for a three-bedroom apartment on the 18th floor. He declined requests for an interview.

The owners have had a few informal meetings to discuss the doings in the building, most recently when a receiver appointed by a state judge took over control of the building last year. But they haven’t taken any action as a group or intervened in the court case, several owners said.

The tower, a slender, rectangular box on East 23rd Street, was all but sold out in the newly fashionable Flatiron district when the financial crisis hit.

With $250 million worth of contracts, the young developers, Ira Shapiro and Marc Jacobs, smelling success in their first Manhattan project, began work on a second building, a 355-foot-high extension designed by a celebrated architect, Rem Koolhass.

In testimony in bankruptcy court in Delaware, Mr. Shapiro, said that at first everyone supported the expanded project.

“Times were good and we sold out and everyone was happy and One Madison Park was a great success,” he told a bankruptcy court hearing.

But in 2009, when the economy faltered, his prime lender, iStar Financial, repeatedly demanded that he provide additional capital, and declined to fund the new building, he said.

In the final push to get the first building finished to begin paying off the loan, Mr. Shapiro testified that he breached his loan agreements with iStar, by borrowing money from vendors and investors secured by deeds on unsold apartments. After iStar discovered the side deals, it filed for foreclosure and work on the building came to halt. Mr. Shapiro didn’t respond to a request for comment.

Last fall, Ian Bruce Eichner, a longtime real-estate developer, put forward a plan to take the development out of bankruptcy, and provide $40 million to finish the building, but he was nudged out after a fight for control between owners of the project.

As the luxury Manhattan market improved this year, other developers became interested. Now Ziel Feldman of HFZ Capital is drafting a plan, with support of both iStar and the sponsors, to move the project out of bankruptcy and perhaps put the unsold units on the market later this year.

Ms. Stern, the condo owner, said the slender, tall shape of the building made its emptiness bearable. With only two apartments per floor, owners didn’t feel that emptiness, she said. During the boom, she and her husband, Kenneth, also signed a contract to buy in a troubled downtown building, but walked away. “That building had hallways you could skate down,” she said. “Here it is cozy.”