Thursday, October 17, 2013

Calvary's the Buckle in NYC's Billionaire Belt

Suppose you attended this church.

Maybe you were even its pastor.  Or one of its elders.

This church is historic, and enjoys a high-profile location in its town, on a busy street.  It is known for preaching the Gospel, which means that while a lot of townspeople may respect its right to hold unpopular positions on various issues, that unpopularity unfortunately extends to their lack of enthusiasm for visiting your church.  The people who do attend your church, however, represent a broad spectrum of incomes, ethnicities, and races from all over town, and even nearby communities.

All of a sudden, you find that the neighborhood around your church is being inundated with billionaires.  Dozens of them.  Spectacular new homes are being built for them, just down the street from your church, and some practically next door.  These billionaires are so rich, they're beyond celebrities; you don't know their names.  You're not even sure what they do for a living.  But they're buying up property like crazy, and paying crazy prices in the process.

Technically, it's not just billionaires buying these homes.  Billionaires are buying, but so are people "only" worth hundreds of millions of dollars.  All of this wealth, and it's literally next door to your church.

Sound utterly absurd?  Well, it's happening right now, even as you read this.

The church is Calvary Baptist, and the neighborhood is Midtown Manhattan, in New York City.  57th Street, to be precise; what author Michael Gross has dubbed the "billionaire's belt."

And Calvary is its geographic buckle!  Smack-dab between Sixth and Seventh avenues, two blocks south of Central Park, and being rapidly surrounded by some of the priciest homes on the planet.

Do you remember, back during Superstorm Sandy last fall, the news about a construction crane that high winds twisted from its moorings atop an uber-luxury residential tower in Manhattan?  Well, that uber-luxury tower, called One57, is a couple of doors down from Calvary Baptist.  It's a building where two condos - that aren't even completed - have already sold for a reputed $95 million each.

Ninety-five.  Million.  Dollars.


And One57 is just the beginning.  Today, there are no fewer than seven super-luxury high-rise residential towers planned within a few blocks surrounding Calvary and 57th Street.  Towers where apartments are commanding prices in the tens of millions of dollars apiece.  Currently, the average price of these apartments is $20 million, with at least one listed for $115 million, but bidding wars may force prices even higher.  That's why everyone assumes it's only billionaires who can afford these places.  For billionaires, real estate in the world's most elite cities has become one of their safest investments, and New York - and Manhattan in particular - is one of those elite cities.  The others are Singapore, Hong Kong, and London, where similar trophy apartments at similar prices are already being snapped up.

You and I might expect at least a couple of trees and a manicured lawn for $20 million, let alone $115 million, but these homes in Manhattan's billionaire belt are all about the two V's:  verticality and views.  Prices go up the higher the apartment is, and the better its views are.  Trees are for Central Park, views of which are New York's most coveted.  And manicured lawn space can be found in one of the other exclusive properties most of these wealthy homeowners maintain in other parts of the world.  After all, it's not likely that many of these super-luxury apartments will actually serve as their owner's family home.  These will be extravagant crash pads when family members visit the city on business or pleasure.  Something to brag about to the little people back in the Mother Country, or the yacht club in the south of France, or one's clients - or competitors.

Indeed, while developers, real estate agents, and their clients claim all of this is about careful investing, it's as much about conquering the aspirations of others as it is sound portfolio management.

As far as verticality is concerned, One57 has topped out at 90 stories, and while some towers in the billionaire's belt will being shorter, others will be even taller, although their floor count may be less.  How can that be?  Because the ceiling height per floor in some of these buildings could range from ten to 15 feet or more per floor.  And, as New York's building frenzy has developed over the years, incorporating things such as hotels and department stores into lower portions of these skyscrapers, the methods builders use to number their floors has become a laughably imprecise science, with hubris and marketing accounting for curiously inflated floor counts.  Remember, the higher the floor, the higher the rent.

Gimmicks abound in all housing price points, even at the tippy-top.

After 9/11, skyscraper planners worried that people wouldn't want to live or work in tall buildings any more, and briefly, rents for lower floor spaces actually increased.  But that's all ancient history now.

This is a new level of luxury, folks, in every way.  And the market for these trophy homes is known to exist, because the first tower of its kind, a marble bauble nearby at 15 Central Park West designed by Robert A.M. Stern, recently saw an apartment sell for the then-record amount of $88 million to a Russian oligarch.

Which helps explain where all of the people to buy these stratospherically-priced homes are coming from.  Most of them are not Americans.  For one project, over on Park Avenue, where listings are going for $80 million even though half of the building doesn't yet exist, marketing material is available in Russian, Chinese, and even Portuguese, for wealthy Brazilians.

It's not that New York City isn't home to its own bevy of billionaires, but they're not as used to thinking of trophy residential real estate outside of discreet enclaves in the Upper East Side like Sutton Place, or maybe facing the park along Fifth Avenue.

Yes, West 57th Street is a prominent boulevard, but with the billionaire's belt being centered more towards Seventh Avenue than Park, it's a bit of a paradigm shift for traditionalists.  When, really, it shouldn't be.  Manhattan's money has been spreading out for generations now.

Even Calvary Baptist's history helps chart Manhattan's evolution.  For example, Calvary's move from its previous location on 23rd Street to its present spot on 57th occurred in 1883, shortly before the city's elite began their own transition from individual family mansions to luxury apartment buildings.  It was a transition that began to stall around Calvary's neighborhood, which sat between the city's wealthy East Side and historically less-affluent West Side.

Today, however, the high rents being asked - and paid - in even formerly-notorious Hell's Kitchen would make protagonists from theater's West Side Story gag with incredulity.

Not that, frankly, things will probably change much at Calvary itself, even as it becomes the buckle in the city's Billionaire's Belt.  It's been generations since the church, as a Bible-preaching, evangelical outpost in an increasingly pluralistic and hedonistic city, has attracted a lot of its pedigreed neighbors.  Interestingly, it probably has more respectability among members of its local business association as one of the district's legacy establishments.  After all, there aren't many things older than Calvary on the block.

Well, older than the congregation, anyway.  Their church facility is relatively new, by New York's antiquity standards.  Its sanctuary is actually carved out of the first four floors of a 16-story hotel owned by the church.  In 1929, when the city widened 57th Street, all of the buildings on the north side of the street - Calvary's side - were demolished for the project, so the congregation's Gothic structure from 1883 was replaced with a facility that could host missionaries coming through New York's bustling harbor on their way to and from foreign countries.  A neat idea, huh?  These days, the hotel is managed by a third party and charges market rates, of which the church receives a percentage.

Several years ago, a developer approached Calvary with an offer to buy their unique structure and replace it with a luxury residential skyscraper, similar to what's being built at One57.  He'd even re-build a sanctuary and office space for the church in the bowels of his new project, similar to Calvary's current set-up.  However, the idea proved too unconventional for the congregation, and they passed up the offer.  With their current sanctuary, the motto "We preach Christ crucified, risen, and coming again" is etched in stone over the doorway facing 57th Street.  What kind of identity would the church be allowed to have as just another tenant in an exclusive apartment tower?

So... suppose you attended Calvary Baptist.  How would you react to this invasion of your church's neighborhood?

Usually, churches worry about their neighborhood going bad with crime and deteriorating property values.  This is a whole 'nother ballgame.  Would you scramble to figure out what really, really, really rich people like in their church services?  Would you revamp your programming to attract people who probably only view the time they'll be spending in your church's neighborhood as a lark, or part of a high-intensity economic transaction?

Or would you hope that Calvary continues to worship the Lord, preach His Word, pray for the city, commission cross-cultural missionaries, minister to the poor, administer the sacraments, and keep the lights lit over their doorway with its "We preach Christ crucified, risen, and coming again" motto?

Yes, I hope Calvary does the latter, two.  In a way, it's a buckle for much more than today's billionaire belt.

Calvary Baptist's sanctuary entrance on W. 57th. St.

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