The Real Deal New York

Park Avenue pads lose panache

Contracts over $4M are down 27% so far this year

September 13, 2016 07:00AM
By E.B. Solomont

775 Park Avenue, 960 Park Avenue and 1021 Park Avenue

775 Park Avenue, 960 Park Avenue and 1021 Park Avenue

Its aging office buildings are struggling with rising vacancies and competition from new developments at Hudson Yards. And even the seemingly invincible luxury market is having a hard time. Park Avenue, it seems, is at risk of losing its role as the coronary artery of wealth and power in Manhattan.

In all, nearly 50 percent of Park Avenue apartments currently listed at $5 million and up have seen price chops since hitting the market, according to The Real Deal’s analysis of 37 such listings on StreetEasy.

Amid an overall market correction, prices and sales at some of the most exclusive co-ops in the city along Park Avenue have softened significantly.

Case in point: Dr. Laura Englander Levin, daughter of hedge funder Israel Englander, recently put her pad at 960 Park under contract after listing it for $13.5 million — a full $2 million less than what she paid in 2014.

Late Wall Street trader Karen Cook’s apartment at 775 Park is currently asking $7.495 million — less than the $7.975 sale price in 2008. Meanwhile, Andrea Jung, the former CEO of Avon, listed her co-op at 1021 Park last fall for $16.2 million. After several price chops, the pad is now asking $13.5 million, according to StreetEasy.

“I feel that this is one of the most price-sensitive markets in which we’ve ever worked,” said Brown Harris Stevens’ TRData LogoTINY Kathy Sloane. “People are looking, but they’re slower to make offers and we don’t know what is holding the buyers back.”

Veteran brokers told TRD that even apartments on Fifth Avenue, just one block over, are faring better than their counterparts on Park. On Fifth, prices are down about 5 percent compared to 15 percent to 20 percent on Park, one broker estimated. “There are more apartments on Park that are more like each other. The ones on Fifth are highly individualized,” the broker said.

There are certainly fewer deals.

During the first 35 weeks of the year, there were 33 contracts signed on Park Avenue co-ops above $4 million — a nearly 27 percent drop from the 45 signed during the same time in 2015, according to data from Olshan Realty.

According to firm founder Donna Olshan, the decline mirrors the rest of the co-op market in Manhattan. “Many of them need a lot of work, and the younger audience has no interest in going through the co-op board process,” she said, citing competition from amenity-laden condos in trendy neighborhoods. “They want newer infrastructure, freedom of ownership and more amenities.”

Warburg Realty’s Frederick Peters agreed. “If you bought your property a year ago, chances are it is worth less today,” he said. Sellers who listed apartments at too-high prices last year, he said, are finding that they now need to reduce prices significantly to make a deal.

In general, the co-op market has faced an uphill battle. During the second quarter, there were 281 co-op sales on the Upper East Side during the second quarter, down more than 37 percent year-over-year, according to real estate appraisal firm Miller Samuel. Meanwhile, prices have stagnated: The median sale price was $892,000 during the second quarter, roughly the same as the prior year’s median of $891,000 and just slightly higher than 2014’s median of $882,000.

“One of the weaker segments of the market has been the prewar co-op market on Park Avenue,” said Miller Samuel’s founder Jonathan Miller, citing a lack of price growth and ample inventory that’s lingered on the market.

In part, Miller attributed the softening to tighter financial restrictions that co-op boards imposed on buyers since the Financial Crisis. It offered financial protection to co-ops several years ago, but now it’s hurting sales in buildings that are seen as overly restrictive.

While certain addresses are seemingly immune to market fluctuations, 2016 still hasn’t been a banner year in terms of record-breaking prices.

So far this year, the priciest closed sale was Liz Swig’s duplex at 740 Park that she once shared with ex-husband Kent Swig, which sold for $18.5 million after two years on the market. Swig, daughter of developer Harry Macklowe, originally listed the co-op for $32.5 million in 2014.

Last year’s record sale went to Andrew and Elizabeth Right (she’s the daughter of Blackstone Group’s Stephen Schwarzman), who paid $35 million for a triplex at 775 Park. The apartment spent five months on the market.

While condos aren’t immune to the Park Avenue market pressures, there are bright spots. For example, Macklowe Properties and CIM Group found a buyer for the $76.5 million penthouse at 432 Park Avenue earlier this year.

But it’s unclear how Zeckendorf Development’s 520 Park is faring, since there’s been little to no news of signed contracts at the 33-unit tower. And Toll Brothers chopped prices at its nine-unit condo at 1110 Park last year, including its $44 million penthouse — which was reduced to $29.5 million this year.