The quarter ended with somewhat of a shrug for the new development market in New York City.
Coming off of a lackluster spring, closed sales were down almost 13 percent year-over-year, while contracts were up almost eight percent, according to Q3 data from Marketproof. Overall contract signings this past quarter fell just short of the number of reported contracts from the same quarter in 2019, with Manhattan reporting 389 contracts last quarter and Brooklyn reporting 231 signed deals.
A relatively quiet quarter is in some ways just what the market needed, argued Jason Thomas, senior vice president of research and analytics at Brown Harris Stevens Development Marketing.
“After all this volatility, demand settled out at the pre-pandemic average,” Thomas said. ”Even though Manhattan is a little bit above it and Brooklyn’s a little bit below it, it’s really like this normalization period.”
Getting Manhattan back to pre-pandemic levels is particularly impressive given interest rates remain two to three times higher than they were before 2020, said Robin Schneiderman, BHSDM managing director.
“People seem to just be in a more optimistic mood about making a real estate purchase at the moment,” Serhant director of research Coury Napier said, following the recent rate cuts from the Federal Reserve.
Luxury contracts guide Manhattan to strong quarter
The big winner for the past quarter was the luxury sector. Units asking over $10 million saw a 39 percent jump this quarter in contracts signed, and units asking between $7 and $10 million saw a 10 percent increase in contracts signed, Napier said.
September saw 47 contracts signed above $4 million and 16 signed above $10 million, according to Marketproof’s monthly report. For comparison, last September saw 27 contracts signed over $4 million.
Midtown East accounted for almost 30 percent of contract signings in Manhattan in Q3. The outsize contribution was driven by the performance of 520 Fifth Avenue, Mickey Rabina’s 99-unit supertall.
The condo building has already sold nearly 70 percent of its units since starting sales in April, according to Marketproof. In Q3, the property signed 37 contracts, the most for a single building in the city.
In September, Manhattan had 141 contract signings, up from 92 last year, for a median sale price of $2.6 million and a median price per square foot of $2,177, according to Marketproof.
The top selling building for the month was Monogram New York, a 190-unit condo tower in Turtle Bay, with nine contracts. Sales launched last September and are being led by Douglas Elliman Development Marketing.
Pricing also eased up in the borough, with the average asking price on an active listing falling by over 2 percent in Manhattan, according to Serhant’s quarterly market report. The average asking price on new listings fell nine percent year-over-year, Napier said.
The fall in Manhattan prices coincides with Brooklyn asking prices per square foot rising to an all-time high of $1,383, according to BHSDM’s quarterly report.
Thomas said that the narrowed spread between Manhattan and Brooklyn pricing may explain much of Manhattan’s outperformance relative to Brooklyn this past quarter.
At the same time, the combination of lagging Brooklyn inventory and high asking prices may signal to developers that it’s time to reinvest in the borough.
“Prices are strong, people are willing to pay these prices, but there’s not enough of these [Brooklyn developments],” Thomas said. “There’s that opportunity for Brooklyn developers at these higher prices, which is what developers need to succeed.”
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