MACKLOWE'S MARCH

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MACKLOWE'S MARCH

By STEVE CUOZZO

REALTY CHECK

HARRY Macklowe is readying a major new hotel/condo development at one of Midtown's most valuable locations, just as central Manhattan has grown increasingly starved for first-class hotel rooms and while the market for mixed hotel/apartment projects remains strong.

Sources said five old brick structures at the southwest corner of Madison Avenue and 53rd Street will soon be razed for a tower of several hundred thousand square feet, with a hotel to occupy roughly the lower third and the luxury apartments the upper floors - a formula similar to that at a planned new project on the site of the Mark Hotel.

It also may resemble the plan for the site of the Swissair Drake Hotel on East 56th Street, which, as my colleague Braden Keil first reported, Macklowe has a contract to buy and which he plans to demolish for a new building.

For years, Macklowe has quietly been assembling the 53rd Street corner site. Last month, city records show, title to 510 Madison, next to the Berkshire Hotel, passed from William Colavito to Macklowe's 53rd Street and Madison Tower Development for $27.5 million.

The same Macklowe company also bought 14 E. 53rd for $11.6 million - giving the developer control of five contiguous buildings forming an L-shape around the corner.

Sources cautioned that Macklowe has yet to file any construction plans and "things could change at any minute." But in the past few weeks, he has filed demolition plans with the Buildings Department for two of the four side-street properties, which are vacant except for a deli at 14 E. 53rd. A third building, 20 E. 53rd, is also being readied for demolition.

Meanwhile, Macklowe is vacating the last store tenants from 510 Madison, an otherwise empty, seven-story brick structure expected to come down soon.

Most of the ground-floor shops, such as Occitane, have already moved out. An employee at Fogal lingerie on the corner said the shop would likely move across the street by the end of April, when the handful of remaining stores will also close.

A call to Macklowe Properties was referred to company president Billy Macklowe, Harry's son, who spearheads many of its development projects but who declined comment.

In fact, Macklowe has kept his plans under tight wraps, and word of the demolition plans had the real estate and hotel worlds buzzing yesterday. Cushman & Wakefield investment-sale specialist Ron Cohen said Macklowe "has thought about it for a long time" and at one point even considered selling the assemblage.

CB Richard Ellis investment-sale specialist William Shanahan, who's not involved with the property today but who brokered the sale of 16-20 E. 53rd to Macklowe some years ago, called the site in the heart of Midtown's retail, office and museum district "perfect, ideal" for a hotel/condo combination.

Sean Hennessey, a Lodging Investment Advisers hotel analyst, said Macklowe's plans are similar to other developers. "The rebound in the hotel industry has led developers to focus on exploiting unmet need," he said. "And hotels serve the purpose of sitting at a project's lower levels, thus pushing the apartments up higher where they command better prices."

Although the wider condo market shows signs of softening, it doesn't yet apply to prime locations where residents can avail themselves of first-class hotel services.

Meanwhile, Midtown and the Upper East Side have lost thousands of hotel rooms in the past few years to residential conversion at the Plaza, St. Regis, Intercontinental and Stanhope, among others - a decline only partly offset by the growth of "boutique" properties in remote neighborhoods.

Cushman's Tom McConnell said, "Macklowe works in mysterious ways."

In fact, sources say, Macklowe has been itching to get back into the Manhattan hotel business ever since he built the Hotel Macklowe off Times Square in the 1980s, only to lose it to his banks in the early '90s. (It's now the Broadway Millennium.) McConnell recalled that Macklowe had the letter "M" woven into carpeting and other trim at the time.

That project earned Macklowe infamy for his midnight demolition without permits of four small buildings on the site. That incident and the collapse of brickwork on Macklowe's 540 Madison Avenue office building in 1997 have subjected his every new project to intense media scrutiny.

But his recent developments have meticulously avoided problems. His redevelopment of 340 Madison Ave. tip-toed carefully around a Christian Science church at the site, and his 310 E. 53rd St. condo tower took pains not to damage landmarked 1800s houses next door.

Macklowe is all over the Manhattan map these days. He bought 767 Fifth Ave., the former GM Building, for a record $1.4 billion in 2003. He's also busy filling up 340 Madison and 610 Broadway, the gleaming office project he developed at the corner of Houston Street.