Just 23 days into 2019, hedge funder Ken Griffin purchased the most expensive home in the country for $238 million. But the penthouse deal, at Vornado Realty Trust’s billionaire-studded 220 Central Park South, set the stage for a clash of wealth and power for the rest of the year. On the one hand, it was a year of record-breaking deals, as Griffin was joined by Amazon’s Jeff Bezos, who paid $80 million for a penthouse at 212 Fifth Avenue, and hedge funder John Griffin, who paid $77.1 million for an Upper East Side townhouse.
On the other, one in four new condos sat vacant due to oversupply — doing little to help New York’s reputation as a playground for the super-rich. As a result, in 2019 state lawmakers increased transfer taxes for residential properties $3 million and up, and they imposed a progressive new mansion tax ranging from 0.25 percent to 2.9 percent. On the rental front, lawmakers in Albany also overhauled the state’s rent stabilization law, significantly curtailing landlords’ ability to raise rents on regulated apartments and capping application fees at $20.
Last year’s political moves came amid a correction in the city’s residential market, which peaked several years ago. In Manhattan, the median sales price during the fourth quarter was flat at $999,000, while sales dropped 1.2 percent year-over-year, according to real estate appraisal firm Miller Samuel. On average, units spent 99 days on the market, up 6.5 percent.
But what may be hurting the luxury market most is oversupply. There were 8.3 months worth of inventory on the market during the fourth quarter, up 9.1 percent year-over-year, according to Miller Samuel.
With one in four new units unsold (according to StreetEasy), condo builders tapped the brakes on the kind of big, expensive projects they championed a few years ago.
In a sign of the times, the sellout for Manhattan’s top 10 most expensive condo projects was just $3.1 billion, down 57 percent from 2018’s $7.3 billion. The top project was Fosun International and J.D. Carlisle Development Group’s Madison House Condominium, a 199 unit tower with a projected sellout of $756 million. (That’s compared to 2018’s top project, HFZ Capital Group’s The XI, with a $2 billion sellout.)
In Brooklyn, meanwhile, developers remained bullish on Dumbo, with three of the top 10 projects planned for the former industrial area. The biggest is CIM Group and LIVWRK’s Front and York, a 408-unit building with a sellout of $833 million.
Despite’s Amazon’s abrupt retreat from Queens, developers are planning substantial condo projects in Flushing and Long Island City; the priciest condo filing of the year was King’s USA Group’s Allura Waterfront, a 134-unit condo in College Point that’s aiming for a $146 million sellout.
With the market contracting, the city’s brokerage wars continued.
In 2019, Douglas Elliman overtook the Corcoran Group to land the No. 1 spot on TRD’s ranking of residential firms with $8.99 billion in closed Manhattan deals. (But that was largely because of legacy new development contracts at projects like 520 Park Avenue, 432 Park Avenue and 160 Leroy.) Corcoran took the No. 2 spot with $4.53 billion, while Compass came in third with $2.01 billion.
But the SoftBank-backed Compass spent a chunk of the year trying to distance itself from WeWork and the stigma of being a startup with an inflated valuation. At the same time, it was struck by a wide-ranging lawsuit from Corcoran’s parent company, Realogy, alleging a range of illicit business practices.
Neither of those two developments slowed Compass’ growing agent headcount, even as both Elliman and Corcoran saw their total number of agents drop. Some of the biggest moves included Charlie Attias, Rachel Glazer and Jim St. Andre joining Compass (from Corcoran, Brown Harris and CORE, respectively). Corcoran also lost Brian Meier to Christie’s and Mike Fabbri to Nest Seekers, and Compass’ Keith Copley returned to Douglas Elliman.