In 2005, the magic number for real estate was eight, as in the eight-figure deal.
Last year saw at least 90 residential sales at $10 million or more, including media tycoon Rupert Murdoch’s record-breaking $44 million purchase of Laurance S. Rockefeller’s 20- room, Fifth Avenue penthouse. In 2004, the appraisal firm Miller Samuel tracked five sales over $20 million, a figure that quintupled in 2005, with a stunning 25 deals over that amount (see chart).
A similar survey done by Stribling & Associates for the first six months of 2005 found 20 co-operatives that closed at $10 million or more, whereas 2004 saw only 13 such sales. Superluxury is increasingly coin of the realm, and the top of the New York market routinely touches the stratosphere.
“In 2005, people became more confident in investing in these trophy properties and did so with a vengeance,” said Jonathan Miller, chief executive officer of Miller Samuel. “The upper end of the market behaves often like a light switch. We’ll often see a surge of activity.”
Most of the biggest deals took place in the first half of the year buoyed by $18.6 billion in Wall Street bonuses from 2004 and an improving economy. Then the luxury market cooled.
It may be picking up again. Two recent record-breaking sales (a condominium at 15 Central Park West for $45 million and the Duke Semans mansion for a reported $40 million) will not factor into 2005 numbers for closed sales, but may signify that the light switch has flipped on once again.
There is also a record-breaking $21.5 billion in Wall Street bonuses in 2005 that may get spent on property.
“We’re not saying it will make or break the market,” said Gregory Heym, chief economist for Brown Harris Stevens. “However, any time almost $22 billion falls into the hands of people, they’re going to want to buy a nicer place, and they view real estate as a pretty sound investment.”
At the pinnacle of the market, it’s often feast or famine, Miller said.
“One or two sales seems to bring out more sales,” he said. “It stimulates people that are on the fence. These properties tend to take longer to sell, just because it’s a smaller demographic that they appeal to.”
Data compiled by The Real Deal from emails sent to more than 60 firms, as well as data culled from Miller Samuel and lists of top deals provided by major brokerages, seems to indicate an incredible depth to an ber-luxury market with 90-plus eight-figure deals. However, some of the increase compared to 2004 may be due to better data collection efforts. The statistics can also be swayed by new luxury development, with units closing all at once when construction is completed.
The data do show that the most expensive properties in the city are found on the Upper East Side. They are concentrated around Central Park, with a notable number of ritzy properties on Central Park West and Central Park South. Sutton Square on East River Drive has its own pocket of pricey properties.
New development at the Time Warner Center and One Beacon Court has added a fresh dimension to the ultraluxury market. Other fairly recent entries to the list of the city’s priciest properties are a handful of loft spaces in Downtown neighborhoods.
“What makes a neighborhood ‘ritzy’?” Miller asked. “One of the factors is the type of housing stock. Park Avenue is configured with more large apartments than say, Yorkville Avenue, which correlates to demographics, rents paid by retailers servicing those consumers, and the like.”
When it comes to the list of the top 50 costliest properties, condominiums have been making a stronger showing in recent years.
“Clearly, condos are gaining share there, with the new construction and the fact that a good part of that new construction is luxury development,” Heym said. “But there are still a lot more co-ops than condos out there.”
Here are the highlights of 2005′s top sales.
Top Co-operative Sale
The top sale in Manhattan at the time also happened to be the borough’s biggest co-operative sale to close in 2005. Media mogul Rupert Murdoch snapped up Laurance S. Rockefeller’s 20-room penthouse at 834 Fifth Avenue for the asking price of $44 million.
One of the listing brokers on the transaction said it was surprising to see a co-operative apartment top the year’s sales, even a very luxurious one.
“This is definitely way above the price that any other co-operative has ever achieved,” said Mary Rutherfurd, a senior vice president at Brown Harris Stevens, who worked with company president Hall Willkie on the sale. “There are very few co-operatives of this size in this location, and it’s not at all that it’s an easy building to get into – quite the contrary.”
While the $44 million price tag has already been eclipsed by a $45 million sale at 15 Central Park West, which has yet to close, the latter was a condominium. It may be a long while before another co-operative sale tops the charts or shatters the $44 million record.
The triplex apartment is in an opulent 1931 building designed by architect Rosario Candela. The deal exceeded a record $42.25 million reportedly paid by financier David Martinez in a deal that closed in 2004 to create a single apartment from two condominium units in the south building of the Time Warner Center on Columbus Circle.
Top Townhouse Sale
The top townhouse sale of 2005 ranked second in terms of overall sales prices in New York City. Russian business magnate Len Blavatnik paid $31.25 million for the former New York Academy of Sciences building at 2 East 63rd Street likely for use as a single-family residence. The sale of the 75-footer surpassed the $30 million sale of the Gianni Versace mansion at 5 East 64th Street, which was arguably incorrectly touted by some as the year’s biggest townhouse sale. Broker Deborah Grubman of Corcoran was a major force in top townhouse transactions in 2005, bringing Blavatnik to the table in the East 63rd Street sale and doing both sides of the deal for the Versace mansion.
The seller in the East 63rd Street sale was represented by four commercial real estate brokers at CB Richard Ellis, who also worked to relocate the Academy’s offices to 7 World Trade Center. The 86-year-old townhouse’s record-breaking price had much to do with its dramatic history.
“It was built as the home of the Woolworth family,” said Mary Ann Tighe, chief executive officer at CB Richard Ellis, who worked with brokers Kenneth Meyerson, Timothy Sheehan and Steven Robinson on the deal. In the 1950s, “the family gave it as a gift to the New York Academy of Sciences, and in its halls all the greatest scientists of the 20th century from Albert Einstein to Watson and Crick have spoken and visited.” Other important features of the property were spectacular architectural detail and a rare interior garden space, Tighe said.
The top townhouse sale of 2005 was not the highest ever on record. That title went to the sale of 25 East 78th Street in 2000 for $31.5 million, said Sotheby’s International Realty broker Meredyth Hull Smith.
But even that sale was dwarfed recently when the Duke Semans mansion at 1009 Fifth Avenue went into contract for as much as $40 million, according to listing brokers. The buyer was Tamir Sapir, a Russian oil baron, and brokers representing tobacco heiress Doris Duke expect the sale to close in 2006. Sapir has announced that he wants to use the top two floors of the mansion as a residence and the bottom five floors to showcase his European ivory.
“I think this portends very well for the townhouse market in 2006,” said Sharon Baum, a senior vice president with the Corcoran Group, one of the listing brokers along with Paula Del Nunzio and Shirley Mueller at Brown Harris Stevens. “I hope we’ll be able to break this record in early 2006.”
That may happen with the mansion at 25 East 78th Street, the former $31.25 million record-holder currently on the market for $50 million. Stribling & Associates also has a listing for two townhouses that could be conjoined at 6-8-12 Sutton Square to make a mansion totaling 66 feet and priced at $42 million.
Tighe said she found it intriguing that two Russian investors have financed the latest big mansion sales. “Once again, people coming from elsewhere teach us what Manhattan real estate is worth,” she said.
Top Condominium Sale
The top condominium sales of 2005 in Manhattan may be anomalous. The first was a $30 million sale to the sponsor of the Time Warner Center, which tied for third in overall New York sales. Stephen M. Ross, the chairman and chief executive officer of the Related Companies, reportedly purchased a space for $30 million, which closed in 2005.
The broker who sold the space said he would never lay claim to the sale, since it was to the building’s sponsor. That same agent, however, was also responsible for another lucrative Time Warner sale, which closed in 2005 though it went into contract in 2001.
Broker Richard Wallgren, former sales director for One Central Park, said Utah cosmetics executive Sandie N. Tillotson’s purchase of a Time Warner condominium grabbed headlines when it occurred. It was the sixth largest sale in 2005.
He said he anticipates there may be more top-dollar sales in Time Warner in 2006.
“I think in 2006 there may be some closings of full floor [apartments] at Time Warner,” Wallgren said. “I believe there’s still one or two that I know are in contract or have sold – we just don’t have the records yet.”
No longer at Time Warner, Wallgren just happens to have handled the recent condominium sale that has reportedly topped national rankings for property sales. Brokers say the sale of the condominium for $45 million at 15 Central Park West certainly bodes well for new development in New York. Reportedly, hedge fund manager Daniel Loeb purchased the apartment. While Wallgren, who heads sales at 15 Central Park West, would confirm nothing, he said: “We’re half sold. We may have multiple sales of apartments over $20 million – in the mid- to upper-20s. The lion’s share of our penthouses are already in contract.”
The units are anticipated to close in the spring or summer of 2007, he said.