Residents of New York’s tallest tower seek $171m in damages

150 150 Rob Brown

Even from a distance, the outcomes described in this article present several valuable learnings and reminders. We should not shy away from innovation in building design as innovation can lead to new opportunities and exciting outcomes. When pushing the limits of building design, it is important that the project team collectively acknowledge that they are ‘doing something new’. This acknowledgement can then serve as a starting point for assessment and thereafter, management of the risks associated with innovation.

The owners’ association at New York’s supertall tower 432 Park Avenue, one of the most expensive addresses in the world, is suing the developers for $US125 million ($171 million) in damages, citing multiple floods, faulty elevators, “intolerable” noise caused by building sway, and an electrical explosion in June – the second in three years – that knocked out power to residents.

The nearly 430-metre-high tower, designed by the firm of star architect Rafael Viñoly, first came under scrutiny in February, when The New York Times revealed many of the claims made in the new suit.

“This case presents one of the worst examples of sponsor malfeasance in the development of a luxury condominium in the history of New York City,” said the complaint filed with the New York Supreme Court on Thursday (Friday AEST), referring to the developers CIM Group and Macklowe Properties.

The damages include the estimated cost to repair some 1500 construction and design defects in common elements of the building that were identified by an engineering firm hired by the owners’ association. It does not include potential punitive damages, or separate lawsuits that individual residents might file.

The damages could rise, said Jonathan Adelsberg, a partner at Herrick Feinstein, which is representing the association, which residents took over from the developers in 2020.

“It’s almost like peeling an onion,” he said, referring to defects that may yet be uncovered. “This is a work in progress in ascertaining what’s wrong.”

A spokesman for the developers said that “each and every commitment and term contained in the 432 Park Offering Plan and Declaration has been honoured”, adding that some of the remaining “maintenance and close-out items” had been obstructed by the owners’ association.

Built in 2015 with a projected sellout value of $US3.1 billion, the pencil-like tower marked a pinnacle in luxury apartment development in the city – much of it geared toward part-time residents and investors who hid their identities behind shell companies.

Buyers have included Saudi retail magnate Fawaz Alhokair, who bought an $US88 million apartment on the 96th floor; a member of the Beckmann family that owns the Jose Cuervo Tequila brand; and the one-time pairing of Jennifer Lopez and Alex Rodriguez, who bought a 4000-square-foot (371-square-metre) apartment for $US15.3 million in 2018, and sold it about a year later.

“Far from the ultra-luxury spaces that they were promised, however, Unit Owners were sold a building plagued by breakdowns and failures that have endangered and inconvenienced residents,” the complaint said.

The complaint cited defects in a number of interrelated systems in the building, many of which present “life safety” issues.

Residents have been trapped “on several occasions” for hours in stalled elevators, at least in part because of the building sway that occurs in towers of such immense height, the suit said.

There have been a number of floods and leaks, both on high floors and in the sub-basement, which the board attributes to poor plumbing installation. Some 35 units and common areas were damaged by water, causing millions of dollars in damages, and one flood disabled two residential elevators for weeks.

Noise complaints related to the quality of construction were frequent. The suit claims that even Richard Ressler, a founder of CIM Group and a unit owner, once said the sound and vibration issues were “intolerable”, and made it difficult to sleep during inclement weather. Another resident said the garbage chute “sounds like a bomb” when garbage is tossed.

Resident complaints at 432 Park, once the tallest residential building in the world, and a symbol of the luxury condo boom of the last decade, are revealing strife inside one of the city’s most secretive and exclusive towers.

The suit said the decision to go public was a result of the developers’ inadequate “Band-Aid approach” to resolving many of the issues. While attempting to patch a leak on a sub-level of the building in June, a contractor mistakenly drilled into electrical wiring, causing an explosion “which threw the contractor backwards, several feet through the air”, knocked out the power for some residents, and shut down the air-conditioning system. The repairs cost more than $US1.5 million.

The 125-unit building is nearly sold out, but since reports of defects at the building emerged in February, resales have been slow, according to Donna Olshan, president of Olshan Realty.

There are 11 units listed for sale, she said, ranging from about $US7 million for a low-floor two-bedroom to $US169 million for the penthouse. Since January, only one sale has closed.

The New York Times