The records of 2006

From Stuy Towm to Harkness Mansion sale, the heady year that was

Jan.January 01, 2007 05:27 PM

Plenty of records fell last year. Christie’s New York set the world’s record for an art auction, bringing in $491.4 million in one night; New York City broke its snowfall record at 27 inches; and the city became the first one in the country to institute a trans fat ban.

But real estate in the city set its fair share of records as well. Sale prices, asking rents, building heights and hotel room prices all topped the charts, even as the rest of the country began to fret about the end of a housing boom.

“It’s been a hell of a year,” said Dan Fasulo, director of market analysis at Real Capital Analytics, about the city’s commercial real estate market.

Commercial real estate property values and sales volume rose as vacancy rates dropped. As of press time, final numbers weren’t available, but projections for total investment sales put 2006 numbers at about $31 billion, a 140 percent increase from last year’s record tally.

The residential market was booming until around the third quarter of 2005, when the first market-wide price declines occurred. Inventory increased dramatically and total sales dropped. The listing inventory for co-ops and condos hit a 10-year record in the second quarter of 2006 at 7,640 units. In Manhattan, units sat on the market for 150 days in the third quarter, also a 10-year record, according to appraisal firm Miller Samuel.

Still, the Manhattan apartment market saw record prices in the second quarter, including the highest average price ever at $1.38 million. Sellers were holding out for the same prices they had seen during the boom, and while there were fewer sales as a result, those that did happen occurred at high prices.

The rental market also headed for extremes. A Manhattan average vacancy rate of 0.8 percent made landlords very happy. “It’s a recipe for very high values,” said Steven Kohn, president of private real estate investment bank Sonnenblick-Goldman. “The New York market, in particular, has been poised for tremendous growth in rents both for commercial and residential properties.”

Market analysts said they expect upward trends will continue this year, at least in the commercial sector.

Against this backdrop, here are a few of the records set in 2006:

Biggest deal: Tishman Speyer pays $5.4 billion for Stuyvesant Town and Peter Cooper Village

William Shanahan, a vice chairman and partner at CB Richard Ellis, negotiated the staggering $5.4 billion acquisition of Peter Cooper Village and Stuyvesant Town on behalf of owner MetLife.

Comprising 80 acres and 110 apartment buildings, the First Avenue property, purchased by a group led by Tishman Speyer, represented the single largest asset and single largest housing complex sale in the country.

“It’s almost a city within a city,” Shanahan said. “The complex was so big it basically encompassed two census tracts of the government. We had 15 professionals working on it 24-7. It was the biggest due diligence Web site we ever set up.”

Shanahan could assist in another record breaker this year, because CBRE is marketing Starrett City, more recently known as Spring Creek Towers, a 6,000-unit rental housing complex in East New York.

Priciest single office building sale: $1.8 billion for 666 Fifth Avenue

Last month, New Jersey-based Kushner Companies announced the purchase of the Tishman Speyer-owned office building at 666 Fifth Avenue for $1.8 billion, the largest single-building transaction in the country.

The building between 52nd and 53rd streets reached a record-setting sales price of $1,200 per square foot. That broke the 2005 record sale, a $1.7 billion deal for the MetLife Building at 200 Park Avenue between 45th Street and Grand Central Terminal. Tishman Speyer paid about $600 a square foot in that purchase.

The 666 Fifth sale is slated to close this month, said Jared Kushner, principal of the company and new owner of the New York Observer newspaper.

Kushner said the record price wasn’t a factor in concluding the deal. Each transaction is considered on its own merits, he says; “this one, I guess, just had a few more zeroes.”

About 84,000 square feet of retail space on the lower levels is now available, and investors are making unsolicited offers, Kushner says.

Other notable office building transactions from 2006 include the $1.5 billion buy of the New York Post’s headquarters at 1211 Sixth Avenue and the sale of 5 Times Square for approximately $1.28 billion to AVR Realty Company. The Post deal is expected to close before the end of March.

Record office rent: $175 a square foot in the General Motors Building and Solow Building

Two Manhattan buildings last year fetched record rents. Both the GM Building at 767 Fifth Avenue, between 58th and 59th streets, and the Solow Building, at 9 West 57th Street, pushed their asking rent to $175 a square foot.

Midtown Class A average asking rents were $70.30 per square foot at the end of September 2006, up 5.1 percent from $66.85 in the second quarter and 18.3 percent from $59.43 the previous year, according to Colliers ABR.

Biggest leveraged buyout: Blackstone Group offers $36 billion for Equity Office Properties

Assuming the private equity firm Blackstone Group dots its Is and crosses its Ts, it will be responsible for the largest leveraged buyout in the nation’s history.

Blackstone offered $36 billion for Equity Office Properties Trust, the country’s largest office building owner and operator, and Equity has accepted the bid in principle, according to Blackstone spokesman John Ford. Equity had been trying to add to its presence in New York in recent years and owns more than 590 buildings across the country, including the 1.6-million-square-foot Worldwide Plaza near Times Square and the 182,000-square-foot Tower 56 at 120 East 56th Street. The closing is not expected until the second half of February, Ford says.

Record average square foot price for a Manhattan apartment: $1,083; record average sale price: $1.4 million; record median sales price: $880,000

In the second quarter of 2006, the city saw the record average square foot price for a Manhattan pad hit $1,083, according to data from appraisal firm Miller Samuel. That dropped slightly by the third-quarter average, which was $1,050 a foot.

The median sales price reached an all-time high of $880,000 and the average Manhattan apartment sales price hit a record of $1,386,193 in the second quarter, Miller Samuel said.

David Michonski, CEO of brokerage Coldwell Banker Hunt Kennedy, said the per-square-foot price rose in the beginning of the year due to new condos hitting the market. “It’s the new construction driving the number up.”

But, Michonski said, the second-quarter data doesn’t accurately reflect today’s market, because it represents deals that were executed in the first quarter of 2006 or even the last quarter of 2005.

Jonathan Miller, president and CEO of Miller Samuel, say records were broken in the second quarter of 2006 because of the “spring market, record bonuses and pent-up demand from the second half of 2005, when the high end was largely dormant.”

Miller expressed moderate optimism about 2007, predicting “some modest price records slightly above prior 2006 records. I suspect there will be a handful of individual sales like we saw this year.”

While prices went up, the sales market was still in a relative lull. Many property owners were only willing to sell for what their neighbors got during the housing boom, and while some sales happened at these prices, most didn’t. Many buyers balked, deciding to wait things out.

Record price per room in a hotel sale that didn’t include conversion plans: $1.4 million per room

The city’s hotel industry enjoyed a strong 2006 as room rates surged.

Last month, a firm owned by the government of Dubai trumped its own per-hotel-room record set earlier in the year with the purchase of the Mandarin Oriental hotel in the Time Warner Center from the Related Companies.

Paying at least $1.4 million per key, Dubai-based Istithmar bested the previous record of $1.05 million per key, which it paid in October for the W New York Union Square hotel, at 201 Park Avenue South near 17th Street.

That was the first time a hotel room sold for more than $1 million a room in New York City.

“We’ll continue to see record prices, but limited further increases for now,” said Bjorn Hanson, a principal in the hospitality and leisure practice of PricewaterhouseCoopers.

NYC & Company, the city’s official tourism marketing bureau, announced at the end of last year that the city’s 72,420 hotel rooms would increase by 13,000 new or renovated hotel rooms by 2010.

Most expensive residential sale: $53 million Harkness Mansion

Paula Del Nunzio, a senior vice president and managing director at Brown Harris Stevens, in November sold the record breaking $53 million Harkness Mansion, a 50-foot-wide townhouse at 4 East 75th Street. The residential sales record fell twice last year.

“It’s the largest residential sale in New York and the largest price ever paid for a townhouse. It has two records,” Del Nunzio said.

The $53 million townhouse record surpassed the city’s record $40 million sale of the Duke Semans Mansion at 1009 Fifth Avenue, in which Del Nunzio represented the seller in a deal that closed in February.

The previous overall residential sales record was the Fifth Avenue penthouse co-op that Rupert Murdoch purchased in late 2004 for $44 million, but then that one was broken by a $45 million sale at 15 Central Park West in early 2006.

“It’s just that prime property,” especially townhouses, “will always command a premium level,” Del Nunzio
says.

Another single-family residence that could break a record is the townhouse at 11 West 10th Street, which has a $37.5 million asking price. Assuming that the townhouse sells for anywhere near $37.5 million, it would represent the most expensive single-family residence sold south of Central Park.

Diane Levine, manager of the downtown office of Sotheby’s International Realty, which is handling the West 10th Street deal, says she can’t reveal the closing price, but that the property was in contract.

Brooklyn condo conversion hits new heights: 512-foot-tall building

Developers in Brooklyn are transforming the skyline from low-rises to high-rises. About 15 projects taller than 20 stories are planned for Brooklyn.

Last month, Forest City Ratner Companies received state approval for its Atlantic Yards project, which includes a tower dubbed Miss Brooklyn. After zoning wrangling, it will be built to a reduced height of 511 feet, one foot shorter than the landmark Williamsburgh Savings Bank building in Fort Greene. The 512-foot bank at One Hanson Place is being converted into 189 condo units. Sales started this past year.

The borough’s tallest new construction project currently underway is the 40-story, 400-foot 306 Gold Street.

Ron Hershco, president of United Homes, along with Dean Palin, president of Palin Enterprises, is developing 306 Gold Street and its 35-story sister tower 313 Gold Street.

Harlem records: Condo sale price hits $6.5 million at 111 Central Park North; apartment seller seeks $19.5 million at 1200 Fifth Avenue; townhouse fetches $3.89 million at 320 Convent Avenue

The first all-glass residential building on Central Park North was topped out last month. One full-floor condo there set a record Harlem unit price at $6.5 million.

“We were the highest trade north of the park that’s been recorded for a condo,” said Louis Dubin, president of the Athena Group, the developer of the 18-story building at 111 Central Park North, off of Lenox Avenue.

The $6.5 million unit totals 5,000 square feet and is on the 17th floor. And the Harlem benchmark could move up even more.

If a condo at 1200 Fifth Avenue between 101st and 102nd streets sells for anywhere near the record-breaking $19.5 million asking price, the triplex penthouse would set an above-96th Street sales record.

Carrie Chiang, a senior vice president at the Corcoran Group and the listing broker for the apartment in the Emery Roth building at 1200 Fifth Avenue, claims the price is “a discount.”

If the same apartment was in a building below 96th Street, Chiang said, the asking price would be $35 to $40 million and “the people would fight for it.”

Some Harlem townhouses now list in the $4 million price range, but the most expensive one that has actually sold was the $3.89 million townhouse at 320 Convent Avenue.

Brian Phillips, an associate broker at Sotheby’s International Realty, the listing broker for 320 Convent Avenue, said the five-story property is unusual because it is semi-detached, is 20 feet wide and has a center hall.

The sale has influenced pricing in the area.

“Everyone now wants a three in front of their house, meaning a three added to their sale price,” Phillips said.

Record in Red Hook: Townhouse sale breaks $1 million barrier at 105 Pioneer Street

Nicole Galluccio, an associate broker at the Brooklyn commercial and residential firm Fillmore Real Estate, and her colleague Marsha Yarde, in June sold a two-family home at 105 Pioneer Street for $1.065 million in the Brooklyn enclave of Red Hook.

Though happy about the sale, Galluccio says she’s optimistic about breaking that record this year. “I’m aiming to break it in the New Year,” she said. She soon plans to list a two-family house in Red Hook for $1.25 million. “I 100 percent expect it to go for over $1.06 million,” she said, “even in a little bit more of a slower market.”

Record average asking rent for Manhattan Class A office space: $66.65 per square foot

In November, the asking rent for Manhattan Class A office space reached a record $66.65 a foot, $3.39 more than the previous record in October, according to data from Colliers ABR.

David Hoffman, executive managing director at Colliers, says asking rents often differ from actual rents, though the margin has become narrower and the concessions have been fewer recently.

Matthew Astrachan of Cushman & Wakefield says commercial rents are increasing and he expects to see at least a $10 a square foot increase over the next 12 months.

Record Fifth Avenue retail rent: $1,500 at 725 Fifth Avenue; record average Madison Avenue retail rent: $909; retail record for East 86th Street: $400 a square foot at 169 East 86th Street

At the end of 2006, the Gucci Group signed a deal for 46,000 square feet of space in Trump Tower at 725 Fifth Avenue at 56th Street. It will be the company’s largest store worldwide when it opens in 2008. The actual rent is blended, but the 6,000 square-foot-space on the ground floor is fetching more than $1,500 a foot.

“It’s the highest rent every paid for a space on Fifth Avenue,” said Stephen Siegel, chairman of global brokerage at CB Richard Ellis, who co-brokered the deal on owner Donald Trump’s behalf.

Median asking rents for ground-floor retail: Space on Madison Avenue between 57th and 72nd streets hit a new record in September, according to the Real Estate Board of New York, at a median asking rent of $1,000 per square foot.

Not everyone thinks that $1,000 a foot is a lot of money.

“That’s almost a bargain on Madison Avenue,” said Jeffrey Roseman, EVP and principal of Newmark Knight Frank Retail. “I just think that it will exceed that moving forward. Madison is truly the last luxury street in the city.”

Newmark Knight Frank determined that the city’s busiest retail intersection is 34th Street at Seventh Avenue. “It’s the most trafficked intersection, the most pedestrians, the busiest corridor,” Roseman said.

East 86th Street set a retail rent record in 2006, with $400 a square foot for the 3,173-square-foot Sprint Nextel lease at 169 East 86th Street.

Tallest condos by neighborhood: New height records in Chelsea, Soho, Lower Manhattan, Lower East Side and the Upper West Side

In the Chelsea neighborhood, Chelsea Stratus is poised to be the area’s tallest condo at 40 stories.

“I think it’s going to have great views, light and air,” said David Sigman, senior vice president at LCOR, the project’s developer. The sales office at the full-service condo at 101 West 24th Street at Sixth Avenue will open next month and construction will be completed in 2008. Apartments will start at $1,000 a square foot and 750 square feet.

The Trump Soho Hotel Condominium New York is slated to be the tallest building in Soho at 45 stories.

“What was important was the ability for the unit owners and the hotel occupants to have gorgeous views — 360 degrees,” said Julius Schwarz, executive vice president for Bayrock Group, one of the developers of the hotel-condo project.

The 413 hotel rooms at 246 Spring Street will be offered for sale at more than $2,000 a square foot.

Forest City Ratner plans to build the tallest residential building in Lower Manhattan, the 75-story Beekman Tower at 8 Spruce Street (see chart for projects in other neighborhoods).

Most expensive parking spaces: Midtown

In a study of garage rates in June, Colliers found that Midtown Manhattan was the most expensive parking district in the country, with a median price of $574.12 per month including taxes.

If you can’t afford to live in the city, or rent office space here, you can’t afford to park here either.

Go to chart: Records set in 2006


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