In the wake of the economic crisis, a citywide inventory drought has sent demand for luxury apartments sky-rocketing across the city. And nowhere, brokers say, is that more true than on the moneyed Upper East Side.
However, New York’s most prestigious zip codes are about to see that inventory-crunch change.
Developers are currently putting the finishing touches on a number of highly anticipated new residential towers, and readying their shovels for construction on others.
In the next few months alone, approximately 363 new units are expected to come onto the market in the neighborhood, according to data provided by new development marketing firm Corcoran Sunshine. Another 79 units are slated to hit the market in 2013 and, so far, 57 more are due to come online in 2014. While inventory is still expected to stay tight in the neighborhood, those numbers represent an increase in new units compared to the last few years.
Many of these projects are being designed to fit contextually into a neighborhood known for its landmarked limestone façades and Renaissance mansions. But make no mistake: They all will feature state-of-the-art conveniences and amenities.
“In the last wave of real estate developing, the goal was to do all-glass buildings,” said Orin Wilf, president of Skyline Developers, which is building a new 39-unit property at 200 East 79th Street. “I’ve never been a big fan of an all-glass building on the Upper East Side because, contextually, it doesn’t really fit into the neighborhood.”
Perhaps easing concerns for developers is that there’s already a recent success story to point to: The new 22-unit condo the Touraine, a Toll Brothers development, hit the market one year ago this month and is now almost sold out. It has just one unit — a five-bedroom penthouse — left for sale, despite the fact that construction is still underway. But unlike others that are now going up on the Upper East Side, that project benefited from a 421-a tax abatement, which made it especially attractive to buyers, said Scott Avram, assistant vice president at Toll Brothers.
Read on for a closer look at the Upper East Side’s newest development projects.
200 East 79th Street
Number of units: 39
Price: $1,800 per square foot
The 19-story tower rising on the corner of 79th Street and Third Avenue has been seven years in the making. That’s how long it took Wilf’s Skyline Developers to assemble the five smaller parcels needed to create the site.
Wilf secured a $112 million construction loan (in a not-so-easy climate for construction lending) from Wells Fargo in March and started construction on the building soon after.
The property, which was designed by CetraRuddy, will feature a façade with ornamental accents on the windows.
Each of the building’s 39 units has four or five bedrooms. In addition to those 39 units, six studio apartments on the building’s second floor will be available to buyers who have purchased in the building to use as offices or guest apartments.
“It’s right in the center of the Upper East Side, so I knew that once everything came together it would be a very successful project based just on its location,” Wilf said. “I wasn’t bidding against anybody, so we’re in the deal at a very good price. By being in the deal at that price, it allows us to sell apartments and not have to charge a ridiculous amount of money.”
Apartments at 200 East 79th Street will range in price from just under $3 million to over $14 million and are opening at around $1,800 per square foot, though unit-specific prices have not yet been released. The price per square foot is lower than other comparable projects in the neighborhood, Wilf noted. According to data from real estate website StreetEasy, the average listing price for an Upper East Side condo is $1,823 per square foot. The median asking price, meanwhile, is $1,322 per square foot.
“We feel we are where the market should be priced,” he said.
The project’s location, however, may be a deal breaker for some buyers, noted Andrew Gerringer, managing director at the Marketing Directors, who is not affiliated with any of the projects mentioned in this story.
“It’s on a busy corner intersection,” he noted, adding that the location may see more noise and foot traffic than desired.
Wilf said Skyline conducted rigorous noise tests and has done everything possible to limit the amount of noise in the apartments.
“We do live in New York City,” he noted. “Every corner is a busy intersection.”
Several industry sources said the developer will likely raise prices once sales gain momentum.
“[The pricing] is probably a little low,” said Toll Brothers’ Avram. “I think they’ll sell for much higher than that. By the time they sell out, he predicted, “they’ll probably be over $2,200 a square foot.”
The property, which is being marketed by Stribling & Associates, started selling last month. By mid-October, 10 units were already under contract, according to Wilf. The building is slated for occupancy in the third quarter of 2013.
135 East 79th Street
Number of units: 30
Price estimate: $3,000 to $3,500 per square foot
The Wilfs are not the only New York real estate family building on 79th Street. The Brodsky Organization — well-known for the Chelsea Enclave, where it created condos in the General Theological Seminary — will soon debut its newest project at 135 East 79th Street, between Lexington and Park avenues.
Construction on the 30-unit condominium is currently underway; the building is scheduled to open for sales sometime before the end of the year.
Brodsky acquired the site four years ago from the Hunter College Silberman School of Social Work, which had been located there for more than 40 years. (As part of the deal, Brodsky built the school a new site on 119th Street.)
“I live in the neighborhood,” said Daniel Brodsky, a partner at the company, noting the difficulty of securing a suitable location west of Lexington Avenue. “It’s one of the few places that is a real residential neighborhood.”
“We did a lot of work to get the site and we think it’s worth it,” he added, noting that the company invested heavily in the project. While he declined to comment on how much was being spent on construction or say how much he paid Hunter for the site, he said it was “by far the most we have ever spent or contemplated spending [on a project].”
The 19-story building was designed by architect and interior designer Bill Sofield, an industry veteran who has collaborated with the likes of jewelry giant Harry Winston. (The architect designed the store’s Shanghai headquarters.)
The project is going for an authentic prewar look. The brick building will feature limestone relief sculptures, which were designed by Sofield using a clay model, and will flank the entranceway. Each of the building’s apartments will have a private elevator lobby and a separate service entrance accessed via a back corridor in their unit, Brodsky told TRD.
The project’s website depicts the building as something of a throwback to an earlier (and very grand) New York, claiming a “passionate attention to detail that was once common in this city, but is now depressingly rare.”
Prices at the building reflect the extra expense at which the building has been constructed, starting at $7 million and going up to more than $20 million for the building’s top-floor apartments.
“It’s a very strong location,” said Gerringer, who speculated that Brodsky will be asking top dollar for the units. “They’ll be going for between $3,000 and $3,500 per square foot,” he predicted.
The Corcoran Group’s Daniela Sassoun said she already has several clients interested in purchasing units.
530 Park Avenue
Number of units: 116
Price: $3,250 per square foot
On Park Avenue and 61st Street, Aby Rosen and Michael Fuchs are transforming a 1940s rental building into a 116-unit condominium.
Their firm, RFR Holdings, bought a majority stake in the 19-story building in 2010, and has invested close to $70 million to renovate the property, according to published reports.
Rosen did not respond to a request for comment.
The prewar, white-brick building, designed by architect George F. Pelham, Jr., will feature classic interiors such as marble baths and herringbone hardwood floors. The building will also have a 24-hour doorman, a private fitness center, a library and a courtyard with a landscaped garden and reflecting pool, according to the project’s website. The amenity package, while not necessarily superior to those offered by some of the other new developments on the Upper East Side, is unusual for Park Avenue, said Jay Solinsky, president of Classic Marketing, the company handling sales at the project.
The developer is reportedly asking an average of $3,250 per square foot, making it one of the most expensive new Upper East Side condos.
While its prominent Park Avenue location goes far to justify its hefty price tags, 530 Park’s floor plans aren’t as “large or as gracious” as the apartments at Philip House, another conversion on 88th Street, said Steve Rutter, head of new development marketing for Stribling, which is selling the rival project.
“[530 Park] has smaller apartments,” he said. “I think they’ve tried to create some larger, but I don’t think their layouts on the whole are as large as what we’re offering.”
Gerringer agreed. “It’s a top location,” he said. “But for what I think it is, it seems to be high-priced based just on things like floor plans — [they’re] nothing special, but they’re okay. It’s not one of those grand, prewar buildings. It’s got the location, but the building itself is [just] white brick.”
The floor plans and combination options, both men said, are limited by the existing structure and the fact that there are still tenants living in the building.
Solinksy said the project — where roughly 30 percent of the units are still tenant-occupied — will get a great deal of value from its location.
“Location plays heavily into people’s buying decisions right now,” he said. “If they’re going to make an investment in real estate, they want to invest in locations that historically have outperformed and remained somewhat stable in flat markets.”
Others echoed that point. “What they have going for them is the panache of being on Park Avenue, which the other buildings do not have,” Toll Brothers’ Avram said. “The question is, how much [more money] does that get you? All things being equal, people still prefer new construction over conversion.”
Park Avenue’s reputation precedes it, especially for foreign buyers, Solinksy said. “People are attracted to the historical significance and the stability that Park Avenue affords,” he said.
680 Madison Avenue (Helmsley Carlton House)
Number of units: 68
Last year, the city’s Landmarks Preservation Commission gave the green light to a proposed gut renovation and residential conversion of the Helmsley Carlton House, a brown-brick former hotel property at 680 Madison Avenue between 61st and 62nd streets.
Gary Barnett’s Extell Development Company purchased the building, built in 1951, in 2010 from the estate of Leona Helmsley, for $170 million. The developer is partnering with private equity firm Angelo, Gordon & Company on the 16-story project.
The duo is now constructing a two-story addition to the property and expanding the footprint on the structure’s north and south sides. A new five-story townhouse will fill what is currently a 35-foot gap between the existing building and its 61st Street neighbor. (Part of the first floor of that 9,700-square-foot house will serve as the lobby for the main apartment building, while the remainder of the first floor will belong to the townhouse.)
The building’s 32,000-square-foot retail space will be upgraded, and a full restoration of its exterior façade will be completed by 2013. (Beyer Blinder Belle Architects & Planners is spearheading the renovation work.)
The property previously contained 157 hotel and residential units. When the renovation is done, it will reportedly have 68 luxury residential units.
Extell did not respond to a request for comment, though Barnett previously said in a statement: “I think when it is completed, people will find Carlton House’s most iconic attributes preserved and its impact on Madison Avenue’s retail streetscape enhanced.”
“There’s a lot of anticipation for that project,” Rutter noted. “The location is just fantastic. My guess is that that [property] will see a different type of buyer [from the projects further north]. There will likely be a strong interest from international pied-à-terre buyers. I think they’ll do really, really well.”
Gerringer noted that the building will likely be a co-op since it’s built on a ground lease, but that’s not likely to deter foreign buyers as Extell will probably work to make the bylaws liberal.
“It will probably scare away some international buyers, but when you [buy in the building] first, you don’t have any board approvals or sponsor issues,” Gerringer said. “When you’re the first buyer from the sponsor, you don’t have to go through that. It’s when you go to sell it [that you run into these issues].”
Pricing information was not available.
Meanwhile, just up the street at 11 East 68th Street, HFZ Capital is planning to convert 41 residential rental units into condos. HFZ plans to update the mechanicals and completely renovate the public areas, according to a spokesperson for the company. Elliman will be handling sales and marketing. But it’s early in the process, and HFZ has not revealed any specifics about the building.
141 East 88th Street (Philip House)
Number of units: 79
Prices: $1,900 per square foot
A prewar building at 141 East 88th Street has been transformed into 79 luxury condominiums by the Cheshire Group, the developer behind the conversion of the Devonshire House on East 10th Street, which serves as home to “30 Rock” actor Alec Baldwin.
The 11-story Carnegie Hill property was originally constructed in 1927 by the Rhinelander Real Estate Company, one of the city’s earliest real estate dynasties, and is designed in Renaissance Revival style with classic brick and limestone. The residences all feature crown moldings, coffered ceilings and wood-burning fireplaces.
The property includes a wide variety of units — with prices ranging from $850,000 for a one-bedroom to $8.5 million for a five-bedroom. A number of penthouses will come on the market next year when their floor plans have been finalized, according to Jenifer Steig, a partner at Cheshire.
The building, which has already begun selling, is asking over $1,900 per square foot for the units currently on the market.
“To me, that pricing is within reason [for the area],” Gerringer said.
Stribling’s Rutter, whose team is marketing the project, said the developer expects to raise prices later in the process if things go well.
While limited by the structure of the existing building, Cheshire reduced the number of apartments from more than 100 to 79.
“Where we were able to combine apartments, we did,” said Rutter. “We would definitely have skewed more toward larger apartments [if we had the option], but I don’t think we would have done [only] four-bedrooms and five-bedrooms. When you have a building that size, it’s good to have somewhat of a mix.”
Still, one industry pro said some of the layouts are problematic, citing one 1,647-square-foot apartment on the second floor, asking $2.99 million, with a master bedroom only slightly more than 10 feet wide.
“A master bedroom being 10 feet wide in a residence that you’re going to sell at this price is unacceptable to me,” said the source, who asked to remain anonymous. “When you’re doing luxury, 12 feet wide is the minimal acceptable size for a master bedroom.” (note: correction appended)
The source added: “Some of this is not necessarily [the developer’s] fault, but some of it is. They could have done better.”
Cheshire is working with interior designer Victoria Hagen and architect ARCT on the project. Both worked with the developer on the Devonshire.
Rutter hopes that replicating the partnership uptown will spell success.
“Devonshire House came on the market just post-Lehman, but it sold well,” he said.
“It’s definitely one of those projects Downtown that would be considered a success across the board.”
Steig said she and partner Susan Hewitt are cognizant of the fact that most of the building’s competition will be located more than 10 blocks south. The project’s lower price point reflects its slightly more out-of-the-way location, but is still relatively aggressive for the neighborhood, she said.
Lenox Hill is still relatively “undiscovered” by foreign buyers, she said, but the project will benefit from its proximity to some of the city’s most exclusive private schools.
Other Upper East Side developers said the project hadn’t yet cropped up on their radar.
150 East 72nd Street
Number of units: 34
Much attention has been paid to what CIM Group and developer Harry Macklowe are planning for the former Drake Hotel site at 440 Park Avenue. Indeed, in May, the real estate press was abuzz with news that the city Department of Buildings issued a permit for the construction of the new 84-story residential building, slated to be the city’s tallest at 1,400 feet.
But another Macklowe project is brewing on the Upper East Side — at 150 East 72nd Street — and could start sales before the year is out.
The 34-unit condo will be housed in a converted Renaissance Revival building, designed by the Mark Hotel architects Schwartz & Gross and developed in 1913 by Edgar A. Levy.
Most of the residences will feature between three and five bedrooms, according to the project’s website.
Macklowe Properties acquired the building in July 2011 for $70 million. Floor plans and pricing were not available at press time.