New residential development prices are outpacing the rest of Manhattan, but brokers say owners of one of the biggest projects to hit the market yet may be asking too much for their future condos.
The 50-story Sheffield was purchased earlier this year by a partnership of Swig Burris Equities, YL Real Estate Developers, and S & H Equities from original owners Rose Associates, with plans to convert the rental building to condos.
The owners, who paid a national then-record $418 million for the 845-unit building at 322 West 57th Street, have floated an average asking price of $1,358 a square foot for tenants who want to buy, according to a preliminary offering plan released by Swig Equities and first reported in the New York Times.
The project, the largest in number of units in at least the last five years in Manhattan, hopes to benefit from the growing cachet of the Columbus Circle area neighborhood, which is now home to the posh residences of the Time Warner Center, Park Imperial and the planned Fifteen Central Park West. The architecturally ambitious headquarters for the Hearst Corporation, designed by Sir Norman Foster, is also rising next door.
That $1,300-plus a square foot price may be a little high, though, some say. The average price for Manhattan new construction and conversion projects was $1,294 a square foot in the second quarter, up by 30 percent from $998 a year ago, according to Halstead Property. During the same time period, overall average apartment prices in Manhattan rose 21 percent, according to the firm.
Whether the Sheffield even gets close to that price depends on the scope of the completed conversion. But the Sheffield’s units are generally small and other non-rental residential buildings nearby don’t generally command prices per square foot as high as $1,300-plus.
“High-end finished units, if they were to redo the units, should be in the $1,200 to $1,300 a square foot range,” said Andy Gerringer, managing director of Prudential Douglas Elliman’s Development Marketing Group, which is not involved in the Sheffield conversion. “But to say they’re going to get that for the occupied units, I think, is a little aggressive.”
The $1,358 figure, Gerringer said, was probably released by the owners to give them negotiating room with Sheffield tenants. The price could change, depending on the conversion and the market when it’s finished.
Specifics of the conversion remain scarce Swig Equities and YL Real Estate both declined to comment for this story and market observers say coming up with exact condo prices is impossible this far away from completion. But a look at an earlier Sheffield conversion attempt shows the dramatic price increases in the market in the last 15 years.
In 1990, Rose Associates filed an offering plan for a condo conversion worth about $140 million, around the same time the company was converting other rental buildings. That offering plan listed a per-square- foot asking price of about $206 or, $335 in today’s dollars (a figure that doesn’t factor in the rise in real estate prices), said Jonathan Miller, CEO of appraisal firm Miller Samuel, which did appraisals in the Sheffield at the time of the 1990 conversion attempt.
But the Sheffield conversion, Miller said, was nixed in the midst of a national recession, among other possible reasons. Rose Associates, however, went ahead with other conversions, including turning the twin-tower Westmore at 333 West 57th Street, kitty-corner to the Sheffield, into a condo-op. Resales at the Westmore now go for around $800 to $1,100 a square foot, Miller said.
If the Sheffield’s owners, then, do get more than $1,300 a foot, they may be setting a fresh pace for condos in the surrounding area, especially ones that are not ultra-luxury.
But first the owners have to get it through the conversion.
“If you have to get these numbers,” Gerringer said, “you really have to go in and do a whole renovation program.”