While developers at many new condos in New York have already slashed prices, Donald Trump is standing firm.
Despite the pressure to get out the price-chopping ax due to current market conditions, The Donald insists he won’t budge at his latest project, Trump
Soho, a 46-story condo-hotel.
“It’s a very good building in a very good location, and we feel we don’t have to,” says Trump of the high-rise, whose 391 units, available since fall 2007, are 55 percent sold, at an average of $3,000 a square foot.
“There’s nothing wrong with lowering prices, nothing wrong with doing that on occasion, but it’s not something we like to do,” Trump told The Real
Deal, adding he never lowered prices in previous downturns.
Whether wise or short-sighted, Trump seems to be bucking a trend.
By most estimates, average sales prices are down 20 to 25 percent in Manhattan from the height of the market. And new construction condos have been especially hit hard with price drops. In one severe example, artist and developer Julian Schnabel’s Palazzo Chupi on West 11th Street has seen price reductions of more than 52 percent on some units.
But Trump’s resistance to a drop in prices seems to be a long-held philosophy. The New York Times recently quoted Louise Sunshine, a Trump Organization alum and one of The Donald’s protégés, saying price cuts were not a necessity, even in this market.
“I would advise anybody who lives in a quality building to raise their prices and have patience,” the paper quoted her saying.
That is despite the fact that banks have become more willing to allow developers to cut prices. As The Real Deal reported last month, while banks were reluctant at the onset of the recession to allow ground-up buildings to lower their prices, an increasing number of lenders have been changing their tune.
“The banks are starting to realize it’s better to get something than nothing,” says real-estate attorney Jeffrey Reich.
Trump may be holding out for $3,000-a-square-foot takers at Trump Soho, but that same anti-price cut mentality does not necessarily exist at a number of existing buildings around the city bearing his name that have resales. Those buildings are obviously a different beast and something Trump has no control over, but about a dozen units in Trump condos across the city sold for between 5 percent and 15 percent less than their asking prices, according to StreetEasy.
At Trump World Tower, for example, No. 8G, which was listed in March for $1.195 million, sold in early June for $1.025 million, a 14 percent discount. Similarly, at Trump Park Avenue (502 Park Avenue), No. 16H was listed for $2.5 million in March but sold for $2.15 million in April, another 14 percent off, according to the data.
Jonathan Miller, the president of appraisal firm Miller Samuel, said Trump, like other developers, probably won’t see an uptick in activity until he lowers prices to be competitive with the resale market.
“Their profits could disappear, and that’s not something to be taken lightly,” Miller says.
But perseverance could pay off long-term. “If they can hold on until the market changes, they will be better off.”