Manhattan luxe market prices high, but could fall

By Jovana Rizzo | August 12, 2008 04:13PM

When deals stop officially closing at ultra-luxe 15 Central Park West and The Plaza Hotel, will the overall market show big price drops?

That’s what high-end brokers say in the Luxury Letter, a monthly newsletter put out by Prudential Douglas Elliman’s Leonard Steinberg, which discusses the city’s overall luxury market and reports on deals in Manhattan’s downtown high-end market.

The report says 15 Cpw And The Plaza are skewing average price figures in Manhattan’s luxury market, which represents the top 10 percent of sales based on price.

The Plaza and 15 CPW have seen sales higher than $50 million. Resale listings at 15 CPW have gone as high as $80 million. Once the two highly-prized properties sell out, the Luxury Letter says those stratospheric average prices could sharply decline.

However, Jonathan Miller, CEO of appraisal firm Miller Samuel, said that while the average luxury price may fall after those buildings sell out, median luxury prices should hold up.

“When there’s a high concentration of high-end sales, there’s an overly optimistic result without providing clear explanations about what’s happening,” Miller said. “I’ve run the data with and without those sales and the impact on the average price was pronounced. On the median price, it was so minimal that it shows there are other high-priced closings.”

Miller Samuel’s second quarter report, prepared for Prudential Douglas Elliman, showed the median price of luxury condos and co-ops in Manhattan to be $4.95 million, while the average luxury price was $6.36 million, a $1.4 million difference. The average and median prices in the second quarter of 2007 had a $900,000 gap, with an average price of $4.6 million and median of $3.7 million.

Several high-priced sales contributed to the widening gap in the second quarter, including venture capitalist Lindsay Rosenwald’s $30 million buy at 15 Central Park West, which had four other $20 million-plus buys.

“The concentration of the high number of closings in these notable high-end properties are widening the spread between the average sale prices and median sale prices,” Miller said.

A second quarter market report by Cushman & Wakefield, a commercial brokerage that also collects residential data, also shows a jump in the average luxury price per square foot in Manhattan. This year’s second quarter price per square foot was $2,250, compared to $1,700 last year.

Miller noted that without sales from 15 Central Park West and The Plaza, the average sale price in the second quarter would have been about $149,000 lower, and with properties yet to close in both buildings, the average sale price will continue to be high in the third quarter.