Central Park Tower’s $4 billion offering plan, the loftiest in New York history, includes 20 condominiums that Extell Development is pricing at a whopping $60 million or more. But if history is anything to go by, Extell may be living in a fantasy – one that could turn into a nightmare if the luxury market doesn’t perk up.
Since 2012, there have been just 61 sales of residential properties for north of $30 million in Manhattan, according to The Real Deal’s analysis of closed sales. Of those sales, 21 closed at $40 million or more and just 13 traded for over $60 million. Even in 2015, when the market was on amphetamines, only four sales at $60 million or above were recorded. This year so far, three sales have closed at over $60 million.
“Going ahead with something like this today is a challenging proposition,” said Andrew Gerringer of the Marketing Directors. “When you have so many really expensive apartments, it’s really very hard to quantify the number of people that can afford them.” (In 2015, TRD took a crack at it and found that the buyer pool for uber-luxury condos was rather shallow.)
Extell declined to comment on its sales strategy or pricing at the condo tower, which also features one unit priced at $95 million and three gargantuan apartments that don’t yet have sticker prices, but are likely to ask in the seven figures.
Although condos on Billionaires’ Row have commanded record prices — the One57 penthouse that sold for $100.5 million is still the city’s priciest closed residential deal on record — many of those deals were struck two or three years ago. Typically, those units were snapped up by finance types, as well as investors from Russia and China looking to safeguard their fortunes.
“It’s such a thin market,” said Noah Rosenblatt, founder of UrbanDigs, a real estate consulting firm. “That sector already got hit, and probably is hovering near its trough.”
Extell should know this better than most. One57 became both the symbol of the luxury boom and the symbol of its decline, with some apartments there now trading at a loss and even facing foreclosure.
The narrow pool of buyers hasn’t dissuaded sellers from shooting high. Last year, 147 listings asking $30 million or more hit the market — a massive jump from just 37 in 2011 (though down from a high of 167 in 2015), according to StreetEasy. Meanwhile, 18 properties asking $60 million and up were listed for sale this year, up from six in 2011.
That wealth of options gives buyers the upper hand, said Compass’ Toni Haber, who is marketing four pads above $30 million, including a penthouse at 56 Leonard that’s listed for $65 million.
“People with this kind of money are smart,” Haber said. “No one wants to get caught at the top. A negotiation that maybe took a week is taking a few weeks. No one wants to be the one that’s overpaying.”
But some brokers cited a recent rally in the top-shelf market as reason for optimism.
Last week, a penthouse at Related Companies’ 70 Vestry, which was asking $65 million, went into contract at a price the developer predicted would set a new sales record Downtown (that distinction currently belongs to a unit at Walker Tower that fetched $50.9 million in 2014). And in June, two condos at Zeckendorf Development’s 520 Park Avenue, asking $70 million each, went into contract within a week of each other.
Rutenberg NYC’s Jeffrey Fields, who brokered one of the deals at 520 Park, said it wasn’t feasible to make sweeping statements about the ultra-luxury market.
“They [trophy deals] happen when the people who want these types of units step up and the market is right for them,” he said. “It takes time to find buyers who have the appetite for $60 million-plus units,” he said.
Fields predicted that once closings begin at 520 Park and Vornado Realty Trust’s 220 Central Park South, the number of ultra-luxury sales will “pop.”
At 220 CPS, which has a projected sellout of almost $3.4 billion, there are 35 units priced above $30 million — including a quadplex asking $250 million, according to the offering plan. (Hedge fund mogul Ken Griffin is reportedly in contract to pay over $200 million for a pad at the property, and a Qatari buyer was said to be in talks for an even more ambitious spread.)
“You could see 15, maybe 20 deals north of $50 million close in 2018,” Fields said.
Others brokers agreed that the market is very much alive, and could gain strength in the next few years.
“If people tell you ultra-luxury is dead, it’s not,” said Nikki Field of Sotheby’s International Realty, who is marketing the townhouse at Extell’s Carlton House for $40 million. (The property was once asking $65 million.) Field said she’s showing the property twice a week to interested buyers.
“Once they get a sense that the high-end market is going again, they will absolutely shoot out of the gate,” she said.
But unlike with One57, which faced little competition when it began sales in 2011 because there was nothing else quite like it, Central Park Tower will be competing with the likes of 220 CPS and 111 West 57th Street, as well as top-of-the-line condos in other parts of the city.
“There is definitely a market for a new, well-developed condominium to absorb a few dozen units priced above $60 million; there’s no doubt about it,” said Douglas Elliman’s Michael Graves. But, he added, “the next wave of high-net-worth, international buyers are going to be young, tech-savvy, entrepreneurial people and I believe their interests will migrate further south than 57th Street.”