Harry Macklowe is shifting from rentals to condominiums at One Wall Street amid a weakening luxury rental market.
Macklowe [TRDataCustom] had initially planned the Downtown office-to-residential conversion to be 65 percent rental apartments, but on Monday he told Bloomberg the project will now be all or mostly condo.
Apartments rents have been falling and concessions have been rising across Manhattan. But the state of the condo market isn’t rosy either, amid a surge in new supply at the high end. “There’s no question about it: The market is slower, more careful in selecting, and of course, the buyers all want to negotiate, test and probe the market,” he said. Macklowe hopes to compete by offering apartments that are slightly cheaper than the nearby new development competition.
“Overproduction is OK because it can create order out of chaos,” he said. “There is now certainty in the market. We know where the price floors are. We know that the demand for $10,000- or $12,000-a-foot units is very slow, that the appetite for that is limited and therefore, the production of that housing should be limited. We also know that there’s a great need for housing in the $2,500- to $3,000-a-foot range.”
Condo units in the building’s top third will ask $2,800 to $3,000, while lower floors will ask $2,000 to $2,500, Macklowe told Bloomberg. A Whole Foods store will anchor the retail section of the property, and the developer said two retail leases totaling 90,000 square feet of space are pending.
Macklowe is still in the market for a construction loan to fund the conversion, and said he is in talks with three lenders. The developers was initially looking to borrow $1 billion, but now said he is seeking a smaller loan alongside a bigger equity buffer. [Bloomberg] — Konrad Putzier