This winter, a young woman looking for an alcove studio on the Upper East Side found fierce competition. Her broker, Lewis Friedman of Bellmarc Realty, said they got tangled in three bidding wars on three different studios, all of them going for north of $450,000. Then, by early March, Friedman said his client had entered into a contract to buy for $430,000 another 600-square-foot alcove studio in an East 80s co-op.
Friedman, who normally brokers larger (and more expensive) apartments, said the fight to get this sale is indicative of an active one-bedroom and studio market, those so-called starter units favored by first-time buyers and younger Manhattanites.
“It’s rough,” Friedman said of the starter apartment sales game. “Not rough as in no movement, but as in dance as fast as you can — limited product and tons of buyers.”
The larger inventory of studios and one-bedrooms, coupled with their affordability compared to larger spreads and the seemingly ceaseless stream of young professionals to the city insure brisk sales rates for starter apartments, which hit a five-year peak just last year, according to appraisal firm Miller Samuel. Fifty-two percent of apartments sold in Manhattan in 2005 were starters — 4,057 out of 7,780. The percentage of smaller apartments sold has risen each year since at least 2001. In 2001, 47 percent of apartments sold were one-bedrooms and studios. In 2002 and 2003, the number rose to 50 percent. In 2004, it rose to 51 percent.
And smaller apartments continue to get snatched up. In February, listings for studios throughout Manhattan declined year-over-year, according to a report from brokerage Halstead Property. Listings for one-bedrooms on the West Side declined 10 percent in February, the report stated, while listings for one-bedrooms on the East Side and Downtown increased 1 and 13 percent, respectively.
In the era of Manhattan apartments selling for more than $1 million on average, cheaper prices for starter units remain a principal cause of these sales. The median sales price for a Manhattan studio last year was $365,000, according to Miller Samuel; for one-bedrooms, $610,000.
Those figures are well below the average sales price for a Manhattan apartment in general. Halstead put that at $1.207 million in February, down from $1.277 million in January. The median sales price for a Manhattan apartment in February was $720,000, Halstead reported, a decline from the $750,000 January median.
Alexandra Bellak, a broker with Prudential Douglas Elliman, said starter apartment listings at that firm for the East Side have garnered more attention from recent buyers. Most of that interest has come from people just out of college or professionals on the cusp of careers, who are looking to build equity through owning rather than renting. One such listing was for a studio in a Lexington Avenue co-op off Gramercy Park. Elliman listed it at $299,000, and the calls, Bellak said, started coming, along with as many as seven showings.
Oftentimes, the biggest obstacles faced by these younger buyers, Bellak said, are the financial demands from co-op boards. Some won’t allow cosigners, for instance, demanding instead that younger buyers purchase on their own. But, she added, it’s all on a case-by-case basis with starter apartments. “You are seeing a lot of young people,” Bellak said, “who want to secure equity.”
And they will not buy just any studio or one-bedroom. Plain, boxlike one-bedrooms “without charisma,” Friedman said, are an example of starter apartments hard to sell. “One-bedrooms,” he said, “that have character or charisma will move fast.”