“Discounts are next”: Buyers target new condos’ lower-priced units

Deals rise after horrible October

Arthur Zeckendorf and Gary Barnett with 1289 Lexington and Central Park Tower (Terra holdings, Getty, RODE, Central Park Tower)
Arthur Zeckendorf and Gary Barnett with 1289 Lexington and Central Park Tower (Terra holdings, Getty, RODE, Central Park Tower)

After months of whiplash in residential markets, November brought some welcome stability to new development sales in New York.

Developers reported 186 contract signings last month, an 11 percent increase from an abysmal October, according to a new report from Marketproof. That’s still down 21 percent from November 2019, but roughly on par with other months since the Federal Reserve began raising interest rates.

The contracts were for apartments asking a combined $548.5 million, up nearly 50 percent from October’s total. The median price of the units was $2.4 million, down about 10 percent.

How many of the deals close, and at what prices, will not be known until they hit property records. But the increased activity and lower median price suggest that rate-sensitive buyers are beginning to step off the sidelines after several months of inactivity, during which ultra-luxury contracts carried the market.

As the merely wealthy begin buying again, developers have started to add incentives. The builders of ​​CBSK Ironstate’s 547 West 47th Street are offering two years of waived common charges. Other sweeteners are becoming more common.

“All those things are enough to keep the prices up,” said Kael Goodman, founder of Marketproof. “What we’re not really seeing is the prices coming down in any significant way.”

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Still, concessions can only go so far. “Discounts are next,” Goodman said.

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Manhattan’s new developments posted 92 deals, up nearly 25 percent from October. That’s roughly where contract signings were in 2019, but down 60 percent from the sugar high of last November, when the S&P 500 index had doubled from its pandemic nadir. (It is down about 17 percent since.)

Zeckendorf Development’s 1289 Lexington in Carnegie Hill notched nine contracts last month, the most of any new development in the city. Andy Li and Ian Slater of Compass are handling sales at the building, which at its current pace would sell out within six months, according to Marketproof. The Zeckendorf brothers bought it out of foreclosure.

The city’s top contract by asking price was a five-bedroom unit at Central Park Tower, which was marketed for $66 million.

Developers in Brooklyn reported 79 sponsor deals, roughly equal to the previous month’s total. The borough’s most expensive buildings, notably Quay Tower and Olympia Dumbo, continued to find buyers.

In all, Brooklyn new developments pulled in three deals asking above $4 million and prices rose across the board. The 79 sponsor contracts were for units asking a combined $124.4 million, up 15 percent from October. Median unit price rose 24 percent to $1.2 million, or $1,308 per square foot.