The Mondrian opens sales.

Two years after Palais Partners purchased the former Le Grand Palais, changed the name to The Mondrian after a broker contest and rented it right up, the owners are beginning a condominium sales program as units come vacant.

"This is a good time, we think, to start selling," said Palais managing partner, Kirkpatrick MacDonald who led the investor group, including his company MacDonald & Cie and foreign investors, in its $50.1 million original purchase.

The 43-story residential building, completed in 1991, was never occupied and the Partners purchased the building in a sealed bid auction conducted in April 1993, and spent a year completing the finishing touches to the property.

The sale was propelled by mortgager Crossland Savings Bank which held a $110 million mortgage for developers Charles Benenson, Laurence A. Tisch & Preston Robert Tisch. The property was never foreclosed.

Fifteen percent of the units, comprising 26 of the smallest studios and one, one bedroom, were initially sold to an investor in November 1994 to make the condominium plan effective. As leases expire on the 151 Palais-owned units, they will be put up for sale as well. There are a total of 178-units in the building plus one superintendent's apartment.

The booming New York City sales market and a Second Avenue and 54th Street location, which is perfect for those wanting a pied a terre, or to be close to midtown offices, the United Nations and Sutton Place, have given the owners the confidence to put into effect their original business plan and make the switch.

William Lie Zeckendorf through Zeckendorf Realty is handling the management of the building and sales of the units. They range in price from $154,000 for a lower floor studio to $2.5 million for the penthouse apartment with two huge terraces that has hosted broker parties in the past.

"The target market is certainly those that desire the areas of Sutton and Beekman Place, the empty nester, the investor, and international users and investors," said Zeckendorf.

He doesn't expect many families to be as interested in the building, although the current renters have magically sprouted children and several have begun negotiations for their units.

MacDonald, however, says, "It's a child, pet friendly building. We are one of the few buildings in the city that has no restrictions. New York is difficult enough. We have bike racks and a health club and encourage people to live there. I expect a whole variety of people who want a pleasant place to live that is also a good investment."

The current pool and health club area is undergoing an expansion and renovation and will soon become a New York Health & Racquet Club (NYHRC) location in partnership with MacDonald. It will be the only location where the Manocherian family does not own the real estate, says Greg Manocherian, managing partner of the NYHRC, who said the families were very close.

"We went in on The Mondrian primarily because we felt that Macdonald and the group were of such impeccable character," explained Manocherian. "We were impressed with the business savvy of Kirkpatrick and Bryce [MacDonald] and were presently surprised and continue to be by our relationship with the MacDonalds."

Bryce MacDonald, Kirkpatrick's son, is actively involved in the project.

The MacDonalds are equally as comfortable with the Manocherians and their relationship with the Zeckendorfs goes back to the grandfathers who worked together on among other projects, Safeway stores in San Francisco.

The MacDonalds were in heavy construction in the West and helped build the Boulder Dam, the Golden Gate Bridge and Candlestick Park.

Bryce MacDonald recalls being embarrassed as an eight-year old when his father stopped the car in the middle of the bridge, and with a multitude of horns honking, had him climb over the safety rail to see a plaque that held the family name.

While he thought he would be a Wall Street banker, he says it is "more interesting and more profitable to work in a family business where I can see all aspects of a deal.

It's good work when you can find it."

At The Mondrian, there is an entire floor of newly furnished model apartments provide by three well-known decorators: Vincente Wolf, Ken Walker and Birch Coffey Design Associates, who also did work at the Millennium Tower for Zeckendorf.

Prices for studios range from $154,000 to $188,000 and range from 376 to 391 square feet. The one-bedrooms, some of which have terraces, range from $347,000 to $462,000 and are 788 to 878 square-feet. The two-bedrooms are priced from $561,000 to $815,000 and range in size from 1,255 to 1,300 square feet. The prices for three-bedrooms are $984,000 to $1,184,000 and are 1,647 square feet.

Penthouses are all sized at 2,282 square feet but prices range from $1.8 million to $2.5 million for the penthouse with two enormous terraces that add another 2,944 square feet to the unit.

The younger MacDonald said they have been flexible with the renters whose leases are expiring over the next year.

Some people have wanted to leave early, others have wanted to stay a couple of additional months and still others are negotiating for their units which have been renting for an average of $41 a foot.

Joseph Baker, vice president Stribling & Associates Ltd., raved about the units.

"I think the workmanship in the apartments is just magnificent," he said. "The kitchens are just exceptional and the bathrooms are wonderful. The spaces are unique, and for those that don't want cookie-cutter rooms, The Mondrian is an alternative."

Baker said there is such a pent-up demand for condos that while he is used to lower prices, the market is on an upswing and he does not find them to be out of line.

The Jack Parker's new Knickerbocker at 72nd Street and First Avenue is also selling.

"We had 74 homes three weeks and we have 44 left," said Jean Alexander, sales representative for Parker East 72nd Associates, L P. "It's incredible. We knew it would be good, but we had no idea."

There are five one-bedrooms, the rest are two to four-bedrooms with one large penthouse having five bedrooms. That unit also has and six and a half baths in a total of 3,454 square feet, plus an 87-foot balcony and is priced at $2.175 million. Another, smaller penthouse was sold for about $1.4 million.

Two bedrooms range from $575,000 to $735,000 while three bedrooms with three baths start at $720,000 and go to $830,000, while those with terraces higher up go for $1.55 million.

"The quality is extraordinary with pecan floors and beautiful marble baths with double sinks," said Alexander.

The Allegro in the Lincoln Center area has also begun its sales effort after using short-term rentals and the Roses have written 85 contracts out of 120 units, many to current tenants.

"I keep being astounded by the market," admitted Baker.

As for The Mondrian, Baker said, "They aren't being overly aggressive with the prices, but they are not out of the picture by any means. It's really a first-class building and if you look at it in comparison with the super luxury buildings it's among the most reasonably priced. The Zeckendorfs have shown the market is better than anyone has expected both with the Millennium and The Mondrian."

MacDonald senior is also comfortable with the pricing structure. "They are priced right on the market," he said. "We did a study of over 40 different buildings and went into great detail and they are priced at the present market.

"We're friendly and we're good people, and The Mondrian is managed well by Zeckendorf, and hand's on by the sponsor and his son."