The Real Deal New York

Residential market report

From peaking sales prices to the latest loss on Billionaires’ Row, a look at the biggest trends
By E.B. Solomont | October 01, 2018 10:00AM

One57 (Credit: iStock)

NYC sales prices notch 10-year high in volatile market

A full decade after the financial crisis, New York City’s housing market has rebounded and then some. Average citywide sales prices are now 2 percent higher than their peak in November 2007 and 28.5 percent higher than the bottom of the market in September 2008, according to StreetEasy. In a new report, the Zillow-owned listings site found that wealthy buyers who bought in September 2008 saw a roughly 33 percent gain on their purchases. For instance, a studio at 88 Greenwich Street that sold for $490,000 in 2010 traded for 655,000 in 2015. In the luxury market, though, the gains and losses were even starker, an analysis by The Real Deal last year found. Former Citigroup chairman Sandy Weill pocketed $44.3 million after selling his penthouse at 15 Central Park West for $88 million in 2012 (he paid $43.7 million in 2007). Less fortunate was art dealer Guy Wildenstein, who paid $21.9 million for a pad at the Plaza in 2008 and sold it for $13 million in 2010.

Rental concessions drag while rents drop

Manhattan rental landlords have now been offering concessions for 39 straight months, causing a “long, slow grind” in the borough’s multifamily market, according to Miller Samuel’s Jonathan Miller. Manhattan’s median net effective rent dropped 2 percent year-over-year, to $3,310 in August, per Douglas Elliman’s rental report, written by Miller. Brooklyn’s net effective rents fared better, with a 0.1 percent drop to $2,849 in August, while concessions in the borough rose for the 31st month in a row. By comparison, rents in Queens are still climbing with fewer concessions. The borough’s net effective median rent rose 5.7 percent year-over-year, to $2,921 in August, while the share of concessions fell to 38.6 percent in August from 44.7 percent last year. But Miller says a growing pool of new rental inventory is skewing the numbers; the median rent for new developments in Brooklyn and Queens in August was $3,200.

Blurring the line between hotels and condos

The difference between residential and hospitality projects is getting harder to discern. Due to an ongoing shift in consumer habits, developers are rethinking how the two go hand in hand. BD Hotels’ Pod Hotels location in Time Square, for example, offers micro-apartments for short-term leasing, the boutique hotel developer’s CEO, Richard Born, said at Columbia University’s Real Estate Development Conference last month. Staying in the furnished units is an experience “in between living in a hotel and an apartment,” he said. On the residential front, condo owners have grown accustomed to hotels and hotel-like amenities at the bases of their buildings. At the Crown Building at 730 Fifth Avenue, Russian billionaire Vladislav Doronin is planning 26 luxury units and an 83-key Aman-branded hotel. The latest must-have amenity: a residents-only restaurant. And at 63 Wall in Manhattan, only tenants can patronize a speakeasy, dubbed the Transcript, on the second floor.

Mounting losses at Extell’s One57

The discounts at Extell Development’s One57 just keep coming. Last month, an unknown buyer snagged a unit on the luxury condo tower’s 77th floor for $42 million, nearly $6 million less than the amount the seller paid in 2015. That deal comes on the heels of Canadian billionaire Lawrence Stroll’s loss; in May, he sold his condo at One57 for $54 million, about $2 million below the amount he paid in 2014. And in March, another seller at the Billionaires’ Row condo tower lost $6 million on a unit that was bought for $21.5 million. Of course, the soft luxury market isn’t just hurting sellers at One57. In the first week of September, sellers in the city cut prices on close to 800 listings — the biggest batch of discounts in 12 years, per StreetEasy. And during 2018’s second quarter, luxury units sold with an average discount of 5.3 percent, according to Miller Samuel. Against that backdrop, Extell has also lowered prices at One57. Founder Gary Barnett said it only makes sense if his competitors are going to offer discounts. But he has another motive: to “clear the deck” for his $4 billion Central Park Tower.