Manhattan’s luxury market took a much-anticipated breather for most of 2017.
The frenetic pace of activity, long the norm during the recent building boom, slowed. Many high-end and ultra-high-end listings faced deeper price cuts, more time on the market and fewer bidding wars.
The overall residential market, however, remained healthy, with continued strong demand for an ever-tight supply of entry-level and midmarket homes.
The year’s priciest transaction occurred in the final days of the year. Three combo-ready penthouses on the 92nd and 93rd floors of the supertall 432 Park Ave. sold to an unidentified buyer for $91.13 million (Dh342.06 million). (Each of these half-floor sponsor units had been priced around $40 million.) This was the most expensive sale in the building and the third-highest ever for a single residence in New York City.
Brokers and other industry professionals expect the market to remain relatively stable as the pipeline of legacy contracts — deals often signed by buyers worldwide years ago while developments were under construction, some carrying stratospheric prices — continues to dry up.
“We’re closing out of an era of new superluxury developments from over the last five or six years,” said Jonathan J. Miller, the president of the Miller Samuel appraisal firm. “They have been built and sold, and we’re moving onto the next phase.”
Equilibrium
Daniel Levy, the chief executive of CityRealty, which tracks apartment sales in Manhattan and Brooklyn, said he believes “the market has found its equilibrium”. Comparing 2017 data with that of the previous year, he discovered “year-over-year virtually identical, almost within pennies of each other.”
Closed transactions for all Manhattan condominiums and co-ops were projected to total 12,000 in 2017, with sales reaching $25.9 billion. This compares with 11,853 transactions and $25.8 billion in 2016, according to CityRealty’s year-end report. (Apartments priced at $10 million and above made up 18 per cent of these sales; those under $1 million were 13 per cent.)
The average sales price was unchanged at $2.2 million, the report said.
“This is a sign of a steady, strong market,” Levy said. “It’s not crazy in either direction. If you’re a buyer, you don’t have to buy the first thing you see. If you’re a seller, you don’t have to wait forever to sell it.”
Many sellers, though, did have to adjust prices to reach a deal. Buyers, more discerning and cautious, eschewed properties considered overpriced or unremarkable, especially on the luxury side, where inventory was more plentiful. The average discount on all condos was around 9 per cent, Miller said, adding that the price drops helped spur sales.
Sellers unwilling to budge on price often saw their listings sit.
“At the high end, a lot of sellers still believe in aspirational pricing,” said Hall F. Willkie, a president of Brown Harris Stevens, “and this is not a market for aspirational pricing.”
Pamela Liebman, the chief executive of The Corcoran Group, also noted “a huge buyer resistance to this tone that sellers took over the last several years, when buyers were so anxious for a good apartment that they would pay anything.”
Manhattan resale listings spent more time on the market in 2017, according to Corcoran data, especially higher-end homes. The average for those costing $10 million or more was 213 days, up from 206 in 2016. For under $1.5 million, it was 90 days, up from 81.
As developers sustained a steady pace of new construction, luxury condominiums continued to fill up. “Many new developments saw quite a few deals in 2017,” said Kelly Mack, the president of the Corcoran Sunshine Marketing Group, The Corcoran Group’s new-development arm.
Less urgency
Nearly 2,400 units opened for sale, which was slightly below the yearly average of 2,500 units for the last 10 years, Mack said, although available new development inventory was still up around 15 per cent from the previous year. “It’s not surprising buyers are acting with less urgency than they were in 2014 and 2015,” she said. “They can shop multiple developments.”
Once again, 432 Park, the concrete-and-glass high-rise on Billionaires’ Row, between 56th and 57th streets, dominated the city’s top-20 biggest sales list. Six transactions there made the cut, including the year’s top sale: the duplex combo on the 92nd and 93rd floors, which totals nearly 12,000 square feet.
The year’s second most expensive closed sale was a penthouse encompassing the 85th floor of 432 Park; it sold for $65.66 million. A similarly sized penthouse two storeys below was third, at $65.16 million. The building is the tallest residential tower in the Western Hemisphere, topping out at 1,396 feet.
Nearly all the top sales in 2017 were at condominiums. While many of them occurred in the new developments, there were also big closings at older buildings.
The city’s fifth most expensive sale was at 15 Central Park West, the twin-tower limestone structure at 61st Street. A penthouse on the 40th floor sold for $50.55 million. (The building once held the record for the city’s most expensive single-family residence, with an $88 million penthouse sale in 2012.)
Another penthouse — this one on the 77th floor at Time Warner Center’s Mandarin Oriental, at 80 Columbus Circle, which opened in 2003 — sold for $38.9 million.
Flat market
The condo market overall was basically flat. The average price for all condo units was $3.1 million, unchanged from 2016, according to CityRealty. The average price per square foot was $1,868, versus $1,888. Sales volume was projected to total 5,600, marginally lower than the previous year’s 5,641.
Construction cranes for residential projects continue to dot the skyline. At least 72 new buildings will add 5,636 units to the Manhattan market between 2018 and 2020, according to another report by CityRealty.
Among the notable developments: 220 Central Park South, a limestone-clad skyscraper set to open in late 2018, and where a quadruplex was listed for $250 million. If sold for that price, or anywhere near it, this would be the most expensive single residence in New York City. The record is currently held by a duplex at the pinnacle of One57, in the heart of Billionaires’ Row at 157 West 57th St. It sold in early 2015 for $100.4 million.
Other coming developments include another supertall addition to Billionaires’ Row, Central Park Tower, on West 57th Street, which will rise 1,550 feet. Also, 53W53, on West 53rd; One Manhattan Square on the Lower East Side; and 15 Hudson Yards, the first condo in the Hudson Yards mega development.
Market analysts are optimistic about sales despite the slowdown in the luxury. “There are unique buildings that are so special — because of location, amenities or architecture — that they can buck the trend,” said Gregory J. Heym, the chief economist of Terra Holdings, the parent company of Brown Harris Stevens and Halstead Property.
Gary Barnett, the founder and president of the Extell Development Co, said he’s already seeing healthy sales activity at One Manhattan Square, which his firm is developing, along with Central Park Tower.
“We’re comfortable with the pace of sales there,” he said, though declining to disclose how many of One Manhattan Square’s 815 units have been spoken for since sales began in 2016.
Prices at that building, which will tower over the East River at the base of the Manhattan Bridge, are significantly more affordable there than at Extell’s other developments, which include One57. They start at around $1.2 million for a one-bedroom and go up to $12 million for a duplex penthouse, Barnett said, adding that carrying costs are also relatively low because of a 20-year tax abatement.
Barnett was also optimistic about future sales at Central Park Tower, which will have a Nordstrom department store at its base and 179 condo units. He didn’t provide specifics about prices, but documents filed with the state attorney general indicate that total sales were anticipated to exceed $4 billion.
“The demand in New York City is still very good,” Barnett said. “People around the world still want to live here.”
— New York Times News Service
