As home prices and sales continue to slide in New York, condominiums are getting cheaper by the dozen. At several new or relatively new buildings, Halstead Property is marketing packages of condo units at discounted prices to buyers willing to buy multiple apartments at a time.
The packages are available in Manhattan and Queens at the 505, the Savoy West, Kalahari, the Lore, the Bridges NYC and 5th Street Lofts.
In most cases, the majority of the apartments have been sold and the developers are anxious to reach the profit line, said Stephen Kliegerman, executive director of development marketing at Halstead.
“The longer the units sit on the market the less profit there is as the developer has to pay to carry the units, pay any remaining interest on their loans and, if the developer is risk averse, they would rather sell in a market they know than one that they don’t,” he said.
The firm is also working with developers with higher vacancy rates who want to attain a certain percentage-sold level, he said, although the goal has nothing to do with the developers seeking to meet the attorney general’s requirement for a building to be declared effective.
“That number is only 15 percent of the units so it’s a small number and all of the sites we noted are far beyond that,” Kliegerman said.
Brokers are targeting American and foreign investors who would buy the apartments and then rent them out, with the potential to get a 4 to 7 percent return on their purchase, he said.
At Lev Parkview Developers’ 505 at 505 West 47th Street, Halstead is offering a package of four one-bedroom units for $2.8 million, which is 10 percent less than the cost of the apartments if purchased individually, Kliegerman said.
At the Kalahari, a 249-unit development at 40 West 116th Street that’s 90 percent occupied, Halstead is marketing two two-bedroom and two three-bedroom apartments for $3.89 million, which also represents a 10 percent price reduction compared to the cost of the apartments if purchased one at a time, Kliegerman said. L&M Development Partners and Full Spectrum Builders developed the Kalahari.
Rockrose Development is converting a 27-story prewar Art Deco rental building at 99 John Street in Lower Manhattan into hundreds of condos and offering the apartments in bulk to investors, in packages of 15 apartments, according to the New York Times.
For brokers, bulk sales don’t have much effect on their bottom line. Commissions may be cut a half a point at the most, but brokers only have to do one deal to make a commission on several units, he said.
How widespread condo packages will become in the recession remains to be seen.
Andrew Gerringer, managing director of Prudential Douglas Elliman Development Marketing Group, said he was not aware of any widespread marketing of condos in bulk. While his firm is not actively marketing any units that way, the company has received bulk offers that have not been acceptable to condo developers.
Back in the late 1980s and early 1990s, Gerringer sold several packages of new condos at prices that were 30 to 40 percent off, on behalf of banks that had foreclosed on properties. Attractive prices are key to selling more than one unit to a buyer, he said.
“It can work if it’s sold at the right price,” he said. “If somebody’s buying them, they have to know they’re buying at a low enough price to make money on the rental, or buying cheap enough to be able to put the unit back on the market and re-sell it. A lot of people are looking but a lot of people are waiting for prices to drop.”