Rent now, buy later at Extell’s One Manhattan Square

Since March, developer closed 194 units worth $332M

Sep.September 25, 2019 07:00 AM
Extell Development chairman Gary Barnett and One Manhattan Square (Credit: Anuja Shakya, StreetEasy)

Extell Development chairman Gary Barnett and One Manhattan Square (Credit: Anuja Shakya, StreetEasy)

First, it offered up to 10 years of free common charges. Now, Extell Development is launching a “rent-to-buy” program to spur deals at One Manhattan Square.

In an email announcing the incentive, the developer said renters will be able to apply a “full year’s rent” to their purchase of a unit at the Lower East Side condo.

In a statement, an Extell spokesperson said “hundreds of residents” had moved into the 815-unit condo since it opened, but it’s also fielded many inquiries about rentals at the amenity-laden tower.

“We anticipate that after living at One Manhattan Square many will take advantage of this program and purchase in the building,” the spokesperson said.

But the developer’s perk is also clearly the latest sign of Manhattan’s slow condo market, where sales rose during the second quarter after a six-quarter decline. At OMS, the Gary Barnett-led firm currently has one-bedrooms starting at $4,000 a month or $1.209 million; two-beds asking $7,500 a month or $1.895 million and three-beds priced at $10,000 a month or $3.527 million. The average sale price of condos at OMS that have closed is $1.7 million, a TRD analysis of records show.

Property records show that Extell closed 194 units for a total of $332.4 million at the tower, which launched sales in 2016. But it’s unclear how many more units may be in contract. OMS currently has 76 active listings on StreetEasy, including a $13.2 million penthouse marked in-contract.

After initially marketing OMS to Asian buyers, Extell has offered several perks to entice buyers. In April, the developer said it would cover up to a decade of common charges for buyers who closed before July 4.

But foreign investment has dried up, and sources said renters are more likely to move to tertiary neighborhoods than buyers.

“The model of ‘If you build it, they will come’ is over,” said Bold New York’s Jordan Sachs, citing low buyer sentiment overall. “People aren’t believers now,” he said. “There’s a lot of talk about a recession on its way.”

Some also speculated the rent-to-buy program would drum up a few deals.

“When you’re on the softer side of the market, people try everything,” said Andrew Gerringer of the Marketing Directors. “It’s all so you don’t have to discount the price of the home.”

In August, Extell secured $690 million in new financing from the Blackstone Group for the remainder of the tower. The funds, which include a $553.5 million senior inventory loan, will be used in part to pay down a $463.2 million mezzanine loan provided by Scott Rechler’s RXR Realty, which covers OMS, 555 Tenth Avenue and 510 East 14th Street.

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