Ukraine-born lawyer Edward Mermelstein, a key advisor to New York Mayor Eric Adams, is a fascinating fellow whom I interviewed for House of Outrageous Fortune, my book on 15 Central Park West. That was back in the days when Ukranians still worked with Russia’s kleptocrats, rather than shooting at them. But the building’s developers gave many of them side-eye, as you’ll learn in this brief book excerpt:
“New York City has always been a port town,” says [15CPW co-developer] Will Zeckendorf. “Foreigners always felt welcome here.” Between a third and half of the “Russians” who bought from the 15CPW sponsor are, more accurately, Eastern European Jews who’d left the Soviet Union years, even decades, earlier, fleeing a society they deemed anti-Semitic.
But others who kicked Fifteen’s tires came from the post-Soviet era and were closely scrutinized, say members of the 15CPW team. Was their money real? And where did it come from? “We definitely turned some down,” a development team source says carefully. [Development partner] Eyal Ofer [the Israeli-born billionaire owner of Global Holdings] is more candid: “I don’t think we allowed Russians to be first.” They did what they could to ensure that early buyers would be “an inducement and not a deterrent. Since we were all intending to live there, we wanted to make sure that at least the first round [would be] people whom we’d like to be with. We wanted to have the right group of people, a base of quality, not of pure money. We weren’t just selling square footage. We created a community.”
They were able to use the frenzied desire for apartments as an excuse to fend off some buyers. “They were told that there’s competition on the apartment,” says Global Holdings executive Samuel Kellner. “The hype was on, so it was very believable that there [were] competing bids. So people of certain disqualifications were told that their apartment was sold to others. There was an attempt to keep the building American, the buying group distinctive.”
Among the real estate lawyers watching this process with interest was Mermelstein, who’d left his native Ukraine in 1974 to get an education in New York. In the last decade, he’d built a thriving practice advising what he calls “high-net-worth” individuals, mostly Eastern Europeans, but also Germans, Italians, Koreans, and Chinese, on the purchase of “second to fifth homes” in New York City. In 2001, several of his clients had contracts at Time Warner, but after September 11, “everybody took off,” he says. “They were very scared the New York market would collapse” and moved their money to Cyprus, Switzerland, London, and even Miami, instead.
But a counterbalancing force was at work, particularly for Russians. “They understood that Russia was a very unstable place, and as quick as they made money, they could lose it,” so by 2003, they were eyeing Manhattan again. Mermelstein advised them to avoid cooperatives. “They have no way of showing credit history,” he says. “There was no history. Why start the process and subject clients to an impossibility?”
So Eastern Europeans focused like lasers on highend condos, and their wealth changed the market. “Pricing has skyrocketed because they were willing to pay whatever it took,” says Mermelstein. “They go to developers and say, ‘You’re asking fifty million dollars? Here’s sixty, but we close next week.’” Like so many others, Mermelstein had watched the [block] where 15 CPW was built] and alerted clients as soon as it was in play. “The clients that missed out on Time Warner understood it would not be good to make the same mistake twice.” But he understood that the 15CPW developers weren’t exactly eager to sell to them. “It was definitely kept quiet,” he says. “You had the titans grab the top apartments.”
Copyright © 2014 by Idee Fixe Ltd.