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The Most Pampering, the Highest Fees

The New York Times // Aug 23, 2012

After paying $15.5 million last November for a 3,000-square-foot apartment at the Carlyle, you would think the Hollywood power broker Brad Grey could rest easy knowing he had bought into a hot Manhattan luxury market.

But there is the little matter of the $455,352 a year that Mr. Grey, the chairman of Paramount Pictures, will have to cough up in maintenance charges. The storied co-op hotel on the Upper East Side, where President John F. Kennedy kept a penthouse suite, charges more per square foot in monthly fees than any other residential building in New York, according to Miller Samuel, a property appraiser.

Still, when you want the best pampering Manhattan has to offer, you find the money. Mr. Grey hasn’t been heard complaining about the $37,946 a month he has to pay to maintain his four-bedroom apartment.

After all, for the price of a new BMW each month, he gets the prestige and prized location of the Carlyle, at 35 East 76th Street, not to mention twice-daily housekeeping service, daily newspapers, and use of Frette bathrobes and 600-count Yves Delorme bedding. There are discounts on laundry, personal training sessions and room-service food and drink.

Sound like a bargain? That depends on what your priorities are.

For those willing to put down millions to own an apartment in Manhattan, a high tolerance for some of the highest monthly charges in the world is almost a prerequisite. Imagine the privilege of paying the equivalent, on an annual basis, of the cost of a new home in many parts of the country — all to ensure that you can get a cup of coffee, or a shirt ironed, at all hours of the day.

“It is a way of life that people really appreciate whose lives are quite busy and full,” said Kathy Sloane, a broker at Brown Harris Stevens who has sold apartments in the Carlyle. “They want everything to be organized for them, and they don’t ever want to question the standard.”

Aside from the Carlyle, which charges monthly maintenance fees of $10.23 per square foot on average, the buildings charging the most every month include the Sherry-Netherland ($6.03), the Lombardy ($4.24) and the Pierre ($3.37), according to Miller Samuel.

Then there are the condo hotels like Trump SoHo, which charges $7.60 per square foot, with Trump International, charging $6.72.
Some condos also rank high among the buildings whose residents are cutting the biggest monthly checks. The Mark charges $4.47 a
square foot. At 995 Fifth — formerly the Stanhope Hotel — you’ll be paying $4.32.

By comparison, Manhattan co-ops charge an average of $1.70 per square foot in maintenance fees, while condos charge $1.57 a square foot on average for the common charge plus real estate taxes, according to Miller Samuel.
So what else do you get for the more than $10 a square foot you would pay at the Carlyle?

Well, there’s window-washing, heavy cleanings, bath amenities, cable television and telephone voice mail. Discounted services also include preferred pricing on treatments at the hotel’s Sense spa, and 20 percent off on parking rates in the garage.

But don’t delude yourself that you’ll get services like dog-walking, couriers and personalized flower arrangements. Those are all extra, said Jennifer Cooke, a spokeswoman for the hotel.

The full-time staff of 400 people — for the 187 hotel rooms and 51 residences — make the maintenance charges palatable to buyers, brokers said.

“You are really looking at buyers who, in order to maintain a staff in any residence that could deliver all of the things that are deliverable at the Carlyle, would have to look at spending hundreds of thousands of dollars a year on that staff,” Ms. Sloane said.

Brokers say they have to price apartments very carefully at the hotel co-ops. Emily Beare, a broker with CORE, said she had had clients looking to spend $10 million or less who had turned down the Pierre because of the monthly maintenance. But she said she had never had a well-heeled buyer looking to spend more than $10 million reject the idea of hotel living simply because of high monthly charges.

When a prized apartment in one of the hotels becomes available, “there is a very immediate market for it,” Ms. Sloane said. Before selling a unit in the Carlyle a few months ago, she invited a group of brokers to help her price it. “We settled on a price, but everyone said that with that maintenance, the apartment is bound to be there a long time.”

She sold it in four days, she said.

How does the Carlyle justify charging more than three times, on average, what the Pierre charges its co-op residents? Christopher Burch lived in the Pierre for about 20 years and headed the co-op board before his divorce from the fashion designer Tory Burch. He later spent more than a year at the Carlyle as well. He sees a comparable level of service at the two hotels, but says the ownership structure is different at the Pierre, allowing for lower monthly fees.

“The Pierre is a tremendous deal,” Mr. Burch said. “It’s a steal.”

Ms. Cooke said the “manner in which we charge at the Carlyle has been the same since the co-op was first formed in 1970.”

For many buyers the Carlyle’s Upper East Side address is simply more prestigious than the Pierre’s, closer to Midtown, brokers said. And some brokers claim that the elevators at the Pierre are not attended 24 hours a day, seven days a week, as they are at the Carlyle, though a spokeswoman at the Pierre says they are.

You buy into an iconic New York experience at the Carlyle. Where else can you hobnob with world leaders, rock legends like Mick Jagger and Hollywood aristocracy like Woody Allen, who performs with his jazz band at Café Carlyle?

President Kennedy was said to have sneaked Marilyn Monroe into the hotel for visits — most famously through a series of tunnels under the property — after she sang “Happy Birthday, Mr. President” at his birthday gala at Madison Square Garden in 1962, according to the author Nick Foulkes, in the book “The Carlyle” (Assouline, 2007). Ms. Cooke said nobody currently on staff was there in 1962, but “that is the rumor that has been passed through the years.”

That lore has value. The pampering tradition at hotels like the Carlyle has inspired developers to try to emulate much of that service experience in new condo developments like 15 Central Park West and the yet-unfinished One57.

It’s hard not to see those buildings as a bit of a deal compared with the Carlyle. The steel magnate Leroy Schecter has listed two apartments together at 15 Central Park West for $95 million. The common charge and taxes (with a 10-year tax abatement helping out) come to about $1.86 a square foot.

“Why not be in a building that is giving you everything you want and yet your monthlies don’t have to be astronomical?” asked Ms. Beare, Mr. Schecter’s broker.

Elizabeth Sahlman, a broker at Corcoran, can understand why that wouldn’t work for some.
At the hotels, “it is the twice-daily housekeeping that a lot of residents just love,” she said.

Original Article: The New York Times