Call it the (overpriced) penthouse effect.
After shooting for the stars with an $80 million penthouse at 160 Leroy Street, Ian Schrager is the latest developer to fall back to Earth with two smaller and less expensive units.
The Studio 54 co-founder – apparently taking a page from projects like 432 Park Avenue and 10 Sullivan Street – has divided what would have been a 12,200-square-foot spread at his curvy ultra-luxe West Village condominium into two units measuring approximately 7,700 square feet and 4,800 square feet, according to filings with the New York State Attorney General. The smaller apartments have price tags to match: $48.5 million and $29.5 million, respectively.
“We thought it would be better for the marketplace; it’s what people were asking for,” said Howard Lorber, president and CEO of Vector Group Ltd., whose New Valley subsidiary is an investor in the project along with the Witkoff Group and Ares Real Estate.
“Buyers said, ‘We love the top floor, but we don’t want to spend $80 million,’” said Lorber, who is also chairman of Douglas Elliman, which is handling sales at 160 Leroy. “So we figured we’d give them what they want.”
The $80 million penthouse at the Herzog & de Meuron-designed project isn’t the only unit the developers retooled.
They’ve also altered the building’s unit mix to include 56 apartments instead of 48, according to an amendment filed with the AG in February and obtained by The Real Deal. In doing so, the developers carved out several smaller units, replacing larger (and pricier) ones.
Five planned penthouses – the smallest of which measured 6,100 square feet and was asking $24.5 million — have been replaced by eight smaller apartments, the amended plans show. The smallest of the eight pads measures 3,562 square feet and is listed for $13.75 million, according to AG filings.
Lorber said the developers’ decision was in response to buyer demand for slightly smaller condos, which are selling at a brisk pace. “The market is strong,” he said. “The main reason was to create some [more units like] a line that had sold out.”
In an interview with Bloomberg last month, the hotelier and developer said he was “mindful but not worried” about the luxury condo slowdown.
“If you have a really great product, it sells irrespective of the time on the market,” Schrager said. “Apple comes out with a product — it sells. People don’t even know they need a new iPhone or iPad. It still sells because it’s so well-executed and that’s what we’re trying to accomplish.”
Schrager obtained a $265 million construction loan for the project in February and said in mid-April that the building was more than 60 percent sold. Schrager himself is a buyer there, having scooped up a 12th-floor apartment for about $15 million earlier this year.
The developers of 160 Leroy are not alone in carving out multiple units from large apartments amidst a waning luxury market.
Last year, CIM Group and Macklowe Properties divided the full-floor units on five floors at 432 Park. And in February, Madison Equities and Property Markets Group’s chopped the $45 million triplex penthouse at 10 Sullivan Street into two units asking $11 million and $29.5 million.
A TRD analysis of StreetEasy data in April found that 35 percent of penthouses on the market have seen price chops.