So this is what a “penthouse correction” looks like?
Of the 261 penthouse units for sale in Manhattan as of April 1, more than 35 percent of them had price chops since being listed, according to data compiled by listings portal StreetEasy at The Real Deal’s request. The median penthouse price was $6.7 million, and the average discount was nearly 10 percent, the analysis found.
The steepest cut was at Walker Tower, where the 5,995-square foot penthouse is now asking $55 million, down from $70 million, a 21.4 percent reduction.
At 165 Perry Street, a $25.5 million penthouse had $14.3 million chopped off the original asking price of $39.8 million. And at 12 East 13th Street, the 5,704-square-foot penthouse is now asking $19.55 million, an $11 million drop from the original price of $30.5 million.
“What we have in New York City right now is a ‘penthouse correction,’” CNBC’s Robert Frank said during a television segment last month. “All these developers chased the very top end of the market because it was so lucrative…. And that’s the area – particularly in Midtown – where we’re going to see dramatic decreases in price.”
The recent cuts shouldn’t be a total surprise, given the growing sense that Manhattan’s ultra-luxury residential market is saturated and experiencing a slowdown amid global economic uncertainty. “There’s too much luxury inventory in a crowded neighborhood,” said Douglas Elliman’s Frances Katzen.
The overall market dynamic has also shifted in buyers’ favor, particularly on the high end. “Sellers have to find themselves a way to become more flexible,” said Brown Harris Stevens’ Kathy Sloane. “It’s a buyers’ market and buyers are saying, ‘Fine, we won’t bid.’”
In addition to StreetEasy’s list, other cuts include the penthouse unit at 11 North Moore, where the price dropped from $40 million to $29.995 million last fall.
Meanwhile, Madison Equities and Property Markets Group just split the $45 million triplex penthouse at 10 Sullivan into two units, one asking $11 million and the other asking $29.5 million. “We thought it was too expensive for the market and where the market was,” PMG’s Kevin Maloney told Bloomberg in February.
| Building | First listed | Initial price | Current price | % change | Price drop |
|---|---|---|---|---|---|
| Walker Tower | 5/18/15 | $70 million | $55 million | -21.4% | -$15 million |
| 165 Perry Street | 4/27/15 | $39.8 million | $25.5 million | -35.9%n | -$14.3 million |
| 12 East 13th Street | 6/17/14 | $30.5 million | $19.5 million | -36.1% | -$11 million |
| 641 Fifth Avenue | 8/6/15 | $45 million | $38 million | -15.6% | -$7 million |
| 37 East 12th Street | 4/28/15 | $33.5 million | $26.9 million | -19.7% | -$6.6 million |
| 1965 Broadway | 10/9/15 | $36.5 million | $29.97 million | -17.9% | -$6.525 million |
| 1110 Park Avenue | 1/20/15 | $35 million | $29.5 million | -15.7% | -$5.5 million |
| 36 Bleecker Street | 4/24/15 | $25 million | $20 million | -20.0% | -$5 million |
| 400 East 67th Street | 7/14/14 | $21 million | $16.95 million | -19.3% | -$4.05 million |
| 350 West Broadway | 8/11/15 | $26.5 million | $22.5 million | -15.1% | -$4 million |
In November, CIM Group and Macklowe Properties took the same approach for full-floor units on five floors of 432 Park Avenue.
Not every penthouse is seeing a price reduction. “But there are penthouses that may have been priced way beyond the marketplace,” said Steve Kliegerman, president of Halstead Property Development Marketing
For many of the developers, the profits are sitting in the penthouse and they’ll be patient, Kliegerman added. “Sometimes penthouses don’t reflect the marketplace because the developer has a different motivation,” he said. “Hopefully, they’ve already paid off their loans, so now they’re looking to maximize their profits.”
Sloane pointed out that unlike the resale market, new condo developers are reluctant to drop prices. At Zeckendorf Development’s 520 Park Avenue, Sloane – who is not involved in the project – speculated that the developers wouldn’t lower the penthouse price of $130 million but may still accept an offer of $100 million or $110 million.
Elliman’s Raphael De Niro, speaking with Frank on the CNBC segment, likened New York City real estate to an “eight-lane superhighway.”
“There’s a lot of traffic coming and going in both directions and occasionally things slow down,” he said.