Condo demand returning with a vengeance, but little out there to buy
By Liana GreyWith New York’s economy continuing to rebound, demand for flashy new condo projects is soaring.
In only three weeks, sales at Chelsea Green, Alfa Development’s 51-unit condo building on West 21st Street, reached the 50 per cent mark.
With prices at the building ranging from $995,000 for a one-bedroom to $8.38 million for a four-bedroom penthouse with a private roof terrace, sales have totaled over $31 million so far.
A major draw has been the building’s sustainable features, including a solar thermal system and recyclable refrigerators; the project is aiming for LEED Gold certification
“It’s clear there is an increased demand for sustainable living among today’s buyers,” said Michael Namer, Alfa’s founder and CEO. “And the rate at which these residences are selling speaks volumes of the current market in New York.”
According to a report released by StreetEasy last week, median listing prices in Manhattan have jumped by 10 percent since a year ago, and climbed by nearly four percent over the last six months. Inventory has decreased by a little over 10 percent since last year, with about 80% more contracts being signed than a year ago.
Boutique-style condos much like Chelsea Green are dominating the market. The brokerage firm MNS is directing sales at a handful of recently-constructed condo buildings, none of which exceed 100 units.
“It’s difficult to get financing in excess of $100 million,” said Andrew Barrocas, founder and president of MNS. “Anything over 250 units becomes impossible.”
Barrocas has seen prices of newly-constructed apartments reach new records. “Prices are surpassing 2007 numbers,” he said. “The condo and rental markets are peaking.”
At One57, one of the tallest residential towers in the five boroughs, developer Gary Barnett of Extell has sold $1 billion worth of luxury condos from a floor plan, including the most expansive ever sold in New York: a 10,923 s/f duplex penthouse snapped up for $90 million.
Rising over 1,000 feet on West 57th Street, the Christian de Portzamparc-designed building will feature 92 ultra-luxury residences above a five-star Park Hyatt hotel, and has drawn buyers from around the globe.
“Our buyers are visionaries who recognize the building’s value, and are confident enough to buy off of floor plans at premium prices,” said Barnett. “We’re seeing buyers from as far as Hong Kong to as near as Fifth Avenue.”Even before it had a formal grand opening, Reade57, a new Tribeca condo from the John Buck Company being marketed by Brown Harris Stevens SELECT, sold 40% of its 84 one- through three-bedroom units are off the market. Just last week, that number went up to over 50%, according to SELECT team leader Shlomi Reuveni.
“We are seeing incredibly high demand for condos,” said Reuveni.
“There is very limited new inventory due to financing limitations and we are seeing very high demand from local and international buyers for different reasons.”
The continued oppressive financing environment facing developers and the absorption of the glut of product that languished on the market in the wake of the crash has created a very simple supply and demand stand-off, explained Reuveni, who has only two units left for sale at The Laureate and at 15 Union Square West.
“I have numerous projects coming to market in 2013 and 2014 which think will be very well received because I keep hearing from brokers and buyers alike, there is simply no product out there.”Barrocas of MNS Realty said that foreign buyers, particularly those from Europe, are driving Manhattan’s luxury condo market.
“There’s definitely a lot more security in the States than overseas,” Barrocas explained. “A lot of foreign money is coming in as opposed to being put in Europe.”
Because foreigners often pay in cash, transactions tend to be relatively straightforward, making life easy for the brokers involved. “It’s a simpler process,” Barrocas said.
Gary Malin, president of Citi Habitats, has also seen foreigners race to snap up a limited supply of new condos.
He predicts more units will come on the market in 2013 and 2014, both in Manhattan and in desirable neighborhoods just across the East River.
“People are calling us asking about a variety of development sites in Long Island City and Astoria,” he said.
Though the majority of new projects in those neighborhoods will offer rentals, “some condos are going to be built in those areas for sure,” Malin said. “A strong Manhattan makes for stronger boroughs as well.”
Indeed, Jeffrey Levine, whose Douglaston Development built the top-selling Edge condo in Williamsburg, is about to start work on a new 500-plus luxury rental on the waterfront, Brooklyn’s most since the recession.
Levine is about to break ground on1 North 4th Place, a new 40 story residential tower with 510 apartments, designed by FXFowle Architects.
The location is unique in that it sits on a small point of land extending into the East River. Residents will have spectacular views to the north, west and south, overlooking the East River and the Manhattan skyline. The residents will have direct access to the esplanade leading to two waterfront parks.
Levine said the fall of Lehman Bros and the start of the market crash in 2008 dealt a hard blow to his development pipeline and to sales at The Edge.
Selling an average of 30 units a month last year put it on the best seller list and there are now only a handful of the original 565 condos available.
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