As competition intensifies, sales offices open earlier

Builders, marketers aim to capture strong demand in presales

From left: Stephen Kliegerman, Steven Roth and David Maundrell
From left: Stephen Kliegerman, Steven Roth and David Maundrell

In a market where selling condos off of floor plans is yesterday’s news, developers and brokers are testing another way to edge out the competition: opening sales offices earlier and earlier.

Stephen Rosenberg’s Greystone Property Development, for example, launched sales in January at Waterbridge 47, a 25-unit luxury condominium at 47 Bridge Street in Dumbo. That was a full year ahead of expected closings, said Dave Maundrell, president of aptsandlofts.com, which is marketing the building. Prices range from $850,000 to $2.2 million for one-, two- and three-bedroom units measuring 700 square feet to more than 1,200 square feet.

While many larger projects launch sales a year or two before the building is complete, Maundrell said typically, he would wait for a building of this size to be 85 percent complete before kicking off sales.

“When the property is further along in construction and close to completion, prices are typically higher,” he said. But, “The sooner the developer can close units, the less interest he spends on his acquisition and construction loans.”

An increasing number of developers are embracing that strategy, brokers said.

“You’re definitely seeing things open earlier, as demand is there,” said Stephen Kliegerman, president of Halstead Property Development Marketing. “Buyers want to get in early and want a better choice of what product they can buy, and also potentially find a lower price point,” he added. “If you have a good sales office with good visuals and materials, you’re able to convey the quality of product and conduct presales.”

In a less heated market, a sales gallery would normally open 12-to-18 months before a building is complete, but nowadays, builders are accelerating that timeline by about six months, said Andy Gerringer, managing director of the Marketing Directors. At 220 Central Park South, for example, “it will be two-and-a-half years before delivery,” he said. “The bigger the building, the longer you may be out, because you have a long way to go for the sales period.”

Weeks before the Attorney General signed off on Vornado Realty Trust’s 220 Central Park South, the REIT said it was quietly marketing the ultra-luxury condos.

220 Central Park South

220 Central Park South

“We have begun to expose the property very gingerly to presales, and to friends and family kind of activity, which has been robust,” CEO Steven Roth said during a conference call on Feb. 18.

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The plan was approved March 4, and the sales office is set to open in late summer. Corcoran Sunshine Marketing Group is handling sales.

To be sure, selling new development condos off of floor plans is ubiquitous. Walker Tower, developed by Property Markets Group and JDS Development at 212 West 18th Street, was 25 percent sold when it launched in 2012, thanks to quiet sales ahead of the official sales launch. Last year, L+M Development Partners’ Adeline, an 80-unit building at 23 West 116th Street, was 50 percent sold within the first month, and Est4te Four’s 160 Imlay Street, a 70-unit building in Red Hook, was 70 percent sold after the first month.

It’s a strategy that is clearly working: A whopping 45 percent of contracts between September and February were signed off of floor plans, according to Olshan Realty, which tracks contracts $4 million and up.

“People have stepped up the timing, getting [sales offices] ready earlier to catch the market the best they can,” said Gerringer.

The Manhattan condo market, which saw 2,445 new units hit the market in 2014, is set to see around 6,000 units hit the market this year, according to Corcoran Sunshine data. That influx has some in the industry expecting more competition and a return to the lavish marketing of the last boom.

In a sign of how important a sales office can be, last year Sherwood Equities built a $1.7 million stand-alone sales office in West Chelsea near its luxury condominium project at 500 West 21st Street, dubbed 500w21. The condominium has 32 luxury units, with prices starting at $2.2 million, or $2,500 per square foot.

But launching sales early doesn’t always pan out. In September, the Naftali Group began listing units at 210 West 77th Street, a 25-unit condominium, but suspended sales in November, sources said, in order to wait for the spring market.

Miller Samuel data shows a rising monthly absorption rate in Manhattan — defined as how many months it would take to sell all inventory. For the 2015 first quarter, the absorption rate for new development units was 12.6 months, up 40 percent from nine months a year earlier.

The entire market had an absorption rate of 5.9 months during the first quarter, up from 4.5 months the year before. That was still faster than the 10-year average of 8.3 months.

In addition to physical sales offices, developers and brokers are relying heavily on a list of interested buyers generated in the months before the sales launch. Then, once the condo offering plan is approved by the Attorney General’s office, buyers can be “teed up and ready to go,” Gerringer said. “They’re the people you start calling and making appointments with when you get the building actually ready to be sold.”