Waldorf Astoria’s condo conversion raises concerns

Global Business

Waldorf Astoria's condo conversion raises concerns

Marilyn Monroe, Frank Sinatra, Elizabeth Taylor and every U.S. President since Herbert Hoover have slept in New York’s Waldorf Astoria hotel. But changes are in the works that could make it harder than ever to get a room.

CCTV America’s Karina Huber reports.

Waldorf Astoria\'s condo conversion raises concerns

Waldorf Astoria\'s condo conversion raises concerns

The Waldorf Astoria hotel is about to undergo a major renovation that will reportedly convert 75 percent of the building into luxury condominiums at a cost of around $1 billion. CCTV America’s Karina Huber reports.

The Waldorf Astoria, which was acquired by Anbang Insurance Group in 2014 for a record $1.9 billion, is about to undergo a major renovation that will reportedly convert 75 percent of the building into luxury condominiums at a cost of around $1 billion.

Hotel experts like Mark Van Stekelenburg says it could make good business sense. He says developers can make a lot more money selling condominiums than running a hotel when the property is historic and prestigious.

But real estate appraiser Jonathan Miller, president of Miller Samuel Real Estate, says the timing isn’t great. “Part of the challenge of the Waldorf situation is they’re somewhat late to the party,” Miller said. As a matter of fact, prices among super luxury units have fallen in the first quarter of this year as compared to last year.

And there are other challenges converting iconic hotels into condos – it can be controversial.

About a decade ago, the high profile and historic Plaza Hotel converted part of the building into luxury condos. The decision initially drew protests from the hotel union with a campaign titled “Save the Plaza.” The union and the developer eventually came to an agreement, but concessions had to be made to preserve jobs.

The changes at the Waldorf will reportedly lead to a large number of job losses. But Hilton, which manages the property, and Anbang have allegedly made severance agreements for hundreds of workers at a cost of around $100 million.

Whether that will be enough to appease the union is unclear at this point. But what is clear to high-end real estate expert Donna Olshan is that Anbang’s success will depend on top-notch development. “They have to design a really beautiful product,” Olshan said.

The Waldorf will reportedly close in 2017 and reopen in 2020.