Deep price drops and buyers bent on negotiation are trends in all of New York City’s boroughs, but residential developers say they are seeing distinct variations by neighborhood in the magnitude of price drops and the number of deals that make it to closing.
“We have found a difference in neighborhoods in terms of closings,” said Robert Levine, president and CEO of RAL Companies & Affiliates, at a residential market panel at yesterday’s New York Real Estate Summit, hosted by The Real Deal columnist Michael Stoler. The Real Deal was a sponsor of the event.
In Chelsea, Levine said the buyers are more “viable” than in other neighborhoods. RAL’s Loft 25 project was already priced low compared to neighboring properties, Levine said, so RAL Companies has had no difficulty closing deals. The Upper East Side, where RAL’s projects include the New Yorker condominium at 1474 Third Avenue at 83rd Street, has been the company’s most challenging neighborhood in terms of sealing deals.
The company has had less trouble in Brooklyn. At RAL’s One Brooklyn Bridge Park in Brooklyn Heights, about 90 of the 126 units in contract have closed, another 20 may fall through, and the remaining condo unit buyers are trying to renegotiate, Levine said. The units are selling for an average of over $1,000 per square foot, he said.
Another panelist, Philip Eisenberg, CEO of New Jersey-based Urban American Management, shared the view that the Brooklyn market has remained relatively stable. And in the Bronx, the company’s properties have vacancies, but only in units that are awaiting rehabilitation. In Queens, on the other hand, rents have fallen 10 to 15 percent, and to close deals, the company is paying broker fees and offering a month’s free rent, he said. Eisenberg did not identify specific buildings.
In Manhattan in particular, buyers are focused on negotiating prices, said David Lowenfeld, executive vice president of World-Wide Holdings and developer of a school and residential project at 57th Street and Second Avenue. Lowenfeld said he met with a number of buyers at the building, where units average $1,850 per square foot, who wanted to revisit the closing price of their unit.
At another development, Toll Brothers’ 303 East 33rd Street, negotiation-minded buyers have come into the sales office with offers 70 percent below asking prices, said panelist David Von Spreckelsen, a company vice president.
“They’re not really that serious,” he said. “We don’t get to the point of qualifying them.”
On the flip side, overvaluation is a danger in Midtown Manhattan in particular, said Sam Chandan, president and chief economist of Real Estate Econometrics, who spoke on another real estate summit panel yesterday.
“As we approach the peak of an asset price cycle, there is a far greater likelihood that you will overpay for your assets closer to the center of the city,” he said.