Even in a hot market, some properties just go cold. While prices of über high-end Manhattan apartments are skyrocketing and inventory is tight, not every luxury property ends up in a bidding war. In fact, hundreds of million dollar and multi-million dollar properties are lingering on the market, sometimes for years.
Some say the problem is sellers who are trying to chase the eye-popping new construction luxury market.
“I think everybody started seeing these remarkable prices for high-end developments, from $10,000 to $12,000 a foot, so they thought that was the whole market,” said Kirk Henckels, vice chairman and director of private brokerage at Stribling & Associates, which specializes in luxury residential sales. “So, you had resale condos, townhouses and co-operatives whose owners thought that applied to them. And that was not the case.”
In 2014’s first quarter, the median price for luxury Manhattan properties soared 43.3 percent over last year, according to the latest market report from appraisal firm Miller Samuel. But while the perception of many in the industry is that all of these properties are selling before brokers even get their listing photos loaded online, that is not accurate.
On average, luxury properties, which Miller Samuel defines as the top 10 percent of all condo and co-op sales, were on the market for 131 days before selling in the first quarter, versus 115 days for lower-priced listings.
“The luxury market is targeting a much narrower portion of the buyer pool, and those buyers aren’t panicking or overpaying for these properties, so they tend to sit,” said Jonathan Miller, founder and CEO of Miller Samuel. “The product is also less homogenous and tends to be more highly priced by the sellers initially.”
More than 350 properties have been on the market for more than 180 days, including 49 residences listed at $20 million or more, according to data from listings website StreetEasy compiled for The Real Deal. (StreetEasy’s “on-the-market” counter continues ticking if a listing is removed but then relisted in less than 180 days.)
This month, TRD looked at the 10 properties listed above $20 million that have lingered on the market longest (see accompanying chart.) The properties ranged in price from $21.5 million to $95 million and have sat for between 521 days and 1,449 days.
Coming in at No. 1 is the penthouse at 60 Warren Street in Tribeca, which has been on the market for 1,449 days and is listed at $24.5 million. That was followed by a $30 million townhouse at 12 East 96th Street, which has been on the market for 1,351 days; the $22 million penthouse at 975 Park Avenue at 997 days; a $25 million multi-floor apartment at the Atelier at 635 West 42nd Street at 764 days; and the $25 million apartment 73C at the Residences at the Mandarin Oriental at 80 Columbus Circle, which has been on the market for 750 days.
Only one of the brokers representing those five units responded to requests for comment.
But sources said they were not surprised to see properties sitting, despite the hot market.
“Today’s buyers are 180 degrees opposite from what they were pre-Lehman. Back then, that buyer was showing their money and didn’t care about quality,” said Henckels. Now, they are “extremely quality-oriented,” he said. “So, if you don’t have what they want, they won’t buy it.”
Click to enlarge
Shooting for the moon
Take the full 18th-floor apartment at the Sherry-Netherland at 781 Fifth Avenue, a co-op listed for $95 million, which ranked No. 9 in terms of days on the market on TRD’s list. The property — which has been listed for 597 days, or roughly 18 months — has gone through a revolving door of high-profile brokers.
It was originally co-listed with powerbroker Dolly Lenz when she was with Douglas Elliman and Kathy Sloane of Brown Harris Stevens for $95 million. When Lenz left Elliman to start her own firm in June 2013, Elliman’s Lisa Simonsen took over for her. In October, Simonsen and Sloane cut the price to $88 million. Then, in January, Elliman’s Oren Alexander and his team took over the listing from Simonsen and increased the listing price back up to $95 million. Alexander and his team still share the listing with Sloane.
Alexander acknowledged the high price tag, but said he was encouraged by the activity garnered by the late Edgar Bronfman’s penthouse at the prewar 960 Fifth Avenue nearby. After being listed at $65 million, a bidding war erupted over the full-floor co-op. It reportedly went into contract for $70 million in April after roughly four weeks on the market. If it closes at that price, it will be the most expensive Manhattan co-op sale on record.
“That unit needed a gut renovation,” said Alexander of 960 Fifth Avenue. “Yes, I’m asking $25 million more, but 781 Fifth is turn-key. If you consider the time value of money, then it’s a good deal.”
Alexander is targeting foreign buyers for 781 Fifth, which he said may have been overlooked by previous brokers because the property is a co-op. Foreign buyers, of course, often flock to condos, because many Manhattan co-ops have strict rules that make it harder for them to purchase. But 781 Fifth is more lenient, allowing pied-á-terres and not requiring buyers to document all of their assets for approval.
To help hasten a sale, Alexander has traveled to Qatar, Dubai, London and Geneva to meet with financial advisers and brokers of high net-individuals. His team also started advertising in Candy magazine, a luxury publication distributed to affluent individuals and high-end hotels in London. Alexander said he is confident the 15-room penthouse, which sits on the corner of Central Park at 59th Street and Fifth Avenue, would find a buyer soon, given the location and the size — 7,000 square feet of indoor space and 2,170 square feet of outdoor space.
“You’re seeing trophy properties like this selling left and right [elsewhere in the world],” Alexander said. “This will sell soon and it will break the record for most expensive co-op to sell in the city.”
Problems other than price
In other instances, some of the residences on TRD’s luxury lingerers list have unique challenges — other than price —that have prevented their sellers from getting to the closing table.
For example, unit 77B at 80 Columbus Circle, which has been stuck on the market for 705 days, ranked No. 6 on TRD’s list, clocking in just after the above-mentioned unit 73C. The condo at the Residences at the Mandarin Oriental atop the North Tower of Time Warner Center was originally listed at $42.5 million in February 2012. It was delisted that December and came back on the market at $50 million in February 2013.
The challenge for 77B, according to listing agent Elizabeth Lee Sample of Sotheby’s International Realty, is that the condo has been rented several times while it’s been on the market. “So, it’s only for an investor or user that will wait for the lease to expire,” she said, adding the current lease has approximately a year left.
Other agents representing some of the priciest units that have failed to sell quickly are running into fickle sellers, they said.
For example, the townhouse at 20 East 10th Street — No. 8 on TRD’s list — has spent 606 days on the market at $24.99 million, because the owner had been on the fence about selling it, said Sotheby’s Stephen McRae, who shares the listing with Sotheby’s colleague Debbie Korb. The owner bought the Greenwich Village property in March 2011 for nearly $19 million and, since listing it in September 2012, has not lowered the asking price.
“The owner loves the house,” McRae said. “It’s a special house and hard to replicate.”
Korb noted that the seller had received “good offers” in the past, but was undecided at the time about whether to move.
“As of now, they have decided to sell, but the house is empty so it does not show at its best,” she said by email. “That said, it’s beautifully proportioned, a 25-foot wide house with a deep, south facing garden in a blue chip location. We now have interest from several parties.”
One of McRae’s other listings, the penthouse on 60 Warren Street in Tribeca and No. 1 on TRD’s list, has been on and off the market since March 2010, or for 1,449 days, according to StreetEasy. It was originally listed at $28 million, but the owner dropped the price in September 2012 to $24.5 million, where it stands today.
According to past reports, the penthouse owner, Edward Bazinet — the retired founder of “Snowbabies” collectibles company Department 56 —tried selling the penthouse in 2006, but pulled it off the market the following year because construction on the Smyth hotel next door discouraged buyers. The hotel was more than just a noise nuisance; it also blocked the penthouse’s north-facing view of the Empire State Building, a hit to the property’s value.
That’s not the only challenge the penthouse faces. While it has received many offers, some of which were close to full asking price, the parties couldn’t agree on a closing date because the seller had to move large pieces of art out, which is a complicated process, said McRae.
“The artwork that must be removed is not simply a painting on a wall,” he said.
One of the pieces is on a terrace and requires a crane for removal. Another sculpture must be removed from the marble slab it’s installed upon and reinstalled in a replacement that includes radiant heat flooring. A third, 28-foot-high piece is mounted on a wall and will require wall repairs after removal.
“All of this takes coordination, scheduling, insurance, et cetera,” McRae said by email. “If a buyer wants to close within 30 days, it is a challenge to say the least, especially in Manhattan.”
It’s also enough to derail a luxury sale, even in a hot market.