China’s Greenland Group may come to regret investing in the renovation of New York City’s Park Lane Hotel. At least, that’s a parsing of statements from its main partner on the project, who recently reiterated his conviction that sales are on slowing investment in the New York development market.
Greenland recently acquired a 41 percent stake in Witkoff’s Park Lane Hotel project in New York, but that hasn’t caused the veteran Manhattan developer to moderate his view of the prospects for the US property market.
Speaking at the Weiser Mazars’ Commercial Real Estate Summit in Manhattan on May 10, Witkoff predicted that the New York development market will see “some real distress.”
The developer, who also benefitted from a $229 million investment by China’s Taiping Asset Management in his 111 Murray Street project in New York added that, “Miami is a brewing storm and it’s going to get even worse out there…and I think, in part, we’re going to see it in New York.”
The reason for Witkoff’s concern is the slow pace of unit sales at new development projects in the New York. The Witkoff Group tracks new developments, and the developer explained that at least 15 of them are selling at a rate of just one percent of units of their units each month. “That’s a 100-month sellout,” Witkoff said. “Unless you’re (large developers) MaryAnne Gilmartin or Larry Silverstein, you can’t withstand a 100-month sellout.”
Earlier this month, a Hong Kong-based subsidiary of Shanghai’s Greenland Group acquired the stake in the previously stalled project to convert the Park Lane Hotel into residences from Al Waseet, a Kuwait investment company. In exchange, Al Waseet received more than 459 million convertible preferred shares in a new $8 billion investment fund jointly created by Greenland and Al Waseet.
Before Greenland came on board, Witkoff had indicated that he was slowing his timetable for development on the Park Lane project, telling Bloomberg in January that the project’s “velocity” was not good.