In 2005, an Israeli developer purchased America’s most famous hotel, the Plaza, known as the home of Eloise and memorialized by the likes of F. Scott Fitzgerald and Truman Capote. The developer had grand ambitions to convert the aging landmark into New York City’s priciest, glitziest apartment house, and some two years later, the Plaza Private Residences, as the reimagined hotel rooms were called, went on sale.
High-powered New York lawyers, Wall Street hedge funders, Hollywood executives, and foreign tycoons lined up to purchase the multimillion-dollar condos. There were also buyers of a shadier variety, some of whom showed up with suitcases of cash or an armed security detail in tow. Cronies of Russian President Vladimir Putin bought units, as did a Spanish businessman who would later be imprisoned for money laundering and the former prime minister of an obscure island nation near Fiji who was under investigation. Dozens of shell companies also snatched up apartments, the identity of their true owners shielded behind an inscrutable tangle of legal entities.
For over a century, the Plaza has stood sentry, a marble edifice dominating the southeast corner of Central Park. But while the building has remained, its heart has been removed. Where once men with names like Vanderbilt and Harriman paraded in their top hats and ascots through the Plaza’s opulent halls, now there are a warren of mostly vacant condos serving as Swiss bank accounts for investors to park their money. In fact, there are so few residents living there that when one buyer actually moved in, and then accidentally locked herself in a garbage room while throwing out the trash, she wasn’t found until the following day, as there was no one to pass by and hear her screams.
Meanwhile, the Israeli developer who masterminded the Plaza’s transformation walked away with $1 billion in profit.
The chain of events that culminated in the Plaza Private Residences began some three decades earlier, under the tumultuous tenure of Donald J. Trump. In one of the lesser-covered chapters of his much-examined business career, the future 45th president of the United States made a reckless deal to buy the Plaza and in so doing opened the door to the eventual gutting of one of New York’s most prized institutions.
In 1988, Trump was at the peak of his real estate prowess, and leveraging his position, borrowed more than $400 million to pay a record-breaking sum for the hotel. His office in Trump Tower overlooked the Plaza and he had long pined after the building, dubbing it his “Mona Lisa.”
“I was in love with it,” he said. “I tore myself up to get the Plaza.”
As owner, Trump quickly began attempting to “make the Plaza great again,” which meant painting gold leaf on every column, installing heavy crystal chandeliers in all the rooms, and outfitting suites with whirlpool tubs and swan-shaped faucets.
But the bad business deal Trump had made when he bought the hotel was insurmountable. His ambition to acquire the Plaza had led him to saddle the property with so much debt that he was unable to cover the payments. Just three years after buying the property, Trump became the only owner in its long history to bankrupt the Plaza.
The creditors who took over the hotel from the beleaguered Trump sold it to a Saudi prince and a Singapore billionaire. They, in turn, sold it to the Israeli developer who converted the building into condominiums. With Trump’s failure came foreign ownership that stands even today. (The Israeli developer also carved out a boutique hotel from the less desirable hotel rooms facing the dark side street. An Indian tycoon bought the hotel and, shortly after, was accused of stealing billions of dollars from millions of poverty-stricken fellow Indians. For a time, he ran the Plaza from a maximum-security prison in Delhi, and only recently sold it—to the government of Qatar).
The conversion of the Plaza into condominiums was at the forefront of a larger trend that has culminated in so-called Billionaire’s Row, a stretch of 57th Street just a short walk from the hotel. There, a series of impossibly tall towers has arisen, touting condominiums at even more impossibly high price points. The buildings, like the Plaza condominiums, are largely empty, many owned by absentee billionaires, a few of whom may use them to launder felonious funds.
Interestingly, Trump did more to usher in the popularity of foreign ownership of real estate than merely failing at the Plaza. In 1980, when he began building his flagship Trump Tower on Fifth Avenue, it was one of the few luxury condominiums on the market. At the time, most high-profile buildings in New York were cooperatives, run by shareholders who adhered to strict rules that shunned foreign, absentee buyers. Condominiums, on the other hand, cared little who was buying or whether they ever slept there, as long as they could afford it. Now, nearly every new super-tall tower under construction is a condominium.
Trump has a long history of currying foreign investment, so it should come as no surprise that the country is following along a similar path as the Plaza once did. Most recently, Reuters reported that seven foreign governments rented luxury condominiums in Trump World Tower on First Avenue, unbeknownst to Congress. A possible infraction of the U.S. Constitution’s emoluments clause, which bans officials from accepting gifts or payments from foreign governments without congressional consent, it serves as the latest example in a spate of such activities.
There are Trump’s licensing deals with various foreign hotels, where, in exchange for the use of his famous moniker, he receives a fee plus a cut of every sale—down to hotel-room minibar items. Then there are eyebrow-raising transactions like the one in Palm Beach, where Trump sold a home to a Russian for $95 million—far above the market value—as well as the fact that several in his inner circle have been convicted of crimes relating to foreign interests. Of course, underlying all of this, is Trump’s questionable resistance to give up ownership of his eponymous real estate firm.
With Trump at the helm of the country, it may seem as if capitalism has swallowed democracy. But it isn’t just in politics. Today’s culture is baldly focused on generating money. At the peak of the go-go ’80s, when Trump purchased the Plaza, greed was good, and Gordon Gekko was shorthand for the age. But that ethos of money-first has metastasized into a more widespread phenomenon.
In the Plaza’s heyday, socialites, for better or worse, spent their days sipping tea in the Palm Court and their nights at the theater. There was the eccentric Plaza guest who kept a pet lion in her bathtub, while another dyed her dog’s hair the same blue hue as her dress.
But now, it isn’t enough to be merely a socialite; you must be an entrepreneur. Gone is the time when Paris Hilton was chased from party to party by the paparazzi, the goal to make it into Page Six—now, she helms a fragrance empire worth $2.5 billion. Paris’ old friend Kim is a reality television powerhouse, her mom Kris is a “momager” and her sister Kylie is the youngest ever “self-made” billionaire.
Musicians today brag about hustling and dollar bills, not the sex, drugs, and rock ’n’ roll espoused by earlier generations of rockers, while even college is an opportunity to earn a salary—the most notorious recent example being Lori Loughlin’s daughter, who allegedly got into school on a bribe and then used it to help generate branded content for her two million YouTube subscribers.
It seems as if everything is for sale. Landmarks like the Plaza have been sold off, chopped up, and drained of their character in the pursuit of profit. The disgraced Indian magnate who owned the hotel until recently never slept there and visited just once. The hotel’s basement has become a food hall hawking everything from frozen yogurt to sushi, while the legendary Edwardian Room was leased out to an Italian clothing store shilling $1,000 dress shoes, and when the business failed, was shuttered to the public. How much care can be involved when someone has no connection to a place beyond its usefulness as an investment or a trophy?
When the Plaza first opened, wealth effectuated a sheen of luxury, and the hotel promised an ephemeral allure of glamour and aspiration. But that sentimentality has been replaced with the bottom line, rendering a building that was once full of character and life a desiccated shell, devoid of the spirit that made it an icon. Much in the same way, Trump has monetized the presidency, thereby gutting many democratic norms and traditions. Hopefully, the lessons of the Plaza will be heeded in time to avoid a similar fate for the country.
Julie Satow, author of The Plaza: The Secret History of America’s Most Famous Hotel, is an award-winning journalist who has covered real estate in New York City for more than a decade. A regular contributor to the New York Times, her work has also appeared on National Public Radio, the New York Post, HuffPost, and elsewhere.