Manhattan’s housing market sharply downshifted in 2018, especially at the high end and in new development, as rising inventory and other factors kept homes on the market longer and forced more sellers to readjust both prices and expectations.
But while brokers, developers and industry observers forecast more of the same for 2019, they aren’t too concerned. The overall market remains healthy, they say, as does the local economy.
“The word of the year is reset,” said Jonathan J. Miller, who runs the Miller Samuel appraisal firm in Manhattan. The past year was more of a “normalization of the market,” he said, after record activity in recent years, highlighted by New York City’s single most expensive closing (for now), in early 2015: a $100.5 million penthouse at the pinnacle of the One57 skyscraper.
Pamela Liebman, the chief executive of the Corcoran Group, agreed with that assessment. “Since 2009, the market has gone on a very aggressive ride, and I think it’s normal that we see a bit of a slowdown.”
Comparatively speaking, “sales are not low — they are just not unusually high,” Mr. Miller said. “It’s like we came off the autobahn: It feels very slow relative to the last three to four years, but historically it’s not.”
Indeed, the average price for a condominium in Manhattan has risen 58 percent since 2008, according to CityRealty, which tracks unit sales, and the average price per square foot is 35 percent higher.
During 2018, six apartment sales broke the $50 million mark, and nearly three dozen more closed above $25 million (though some were “legacy contracts,” signed during construction when the market was stronger). “That’s remarkable by any objective measure,” said Daniel Levy, CityRealty’s chief executive.
The year’s biggest closings were two similarly configured duplexes at the just-opened 520 Park Avenue tower on 60th Street. The priciest property sold for nearly $74 million to James Dyson, the founder of the British home-electronics maker Dyson. The other duplex at 520 Park sold for $62 million. And downtown (which CityRealty defines as south of 30th Street) posted a record with the $59 million sale of a penthouse at the new Getty building at 503 West 24th Street, in Chelsea.
Brokers say demand continued at all price levels, if not quite as insistently at the super high-end. But largely absent were the bidding wars of recent years and the rushed purchases from floor plans. Many buyers became more discerning as inventory, particularly in new developments, expanded. Others were more hesitant because of higher mortgage rates (which hurt the starter market in particular) and uncertainty about the new tax law. By Mr. Miller’s account, there were 12 percent more housing units for sale in Manhattan than there were in 2017.
As a result, developers have had to be more strategic to stay competitive. “You need to build in the right neighborhood for the right buyers, or offer something totally unique and in great demand,” said Kenneth S. Horn, the founder of Alchemy Properties. He said sales at 250 West 81st Street, one of several new projects, have gone especially well because “it was a new condo and there are not many new condos in that area.”
Individual sellers, however, were slower to adapt to the changing marketplace, and saw their properties linger. As of the fourth quarter, it took an average of 152 days for a listing in Manhattan to go into contract, up from 101 days the same period in 2017, according to Garrett Derderian, the director of data and reporting for Stribling & Associates.
Over all, the average Manhattan apartment price slid nearly 5 percent from 2017, to $2.06 million from $2.16 million, according to a year-end market report by CityRealty. (The drop would have been steeper without the pricey new-development sales.) Closed transactions for all condos and co-ops were projected to total 10,354, the report said, with sales reaching $21.3 billion. That’s down from the 13,295 transactions and $25.7 billion in sales in 2017.
“The larger story is volume,” Mr. Levy said. “While it’s down, it’s not falling off a cliff.”
Several luxury condominiums filled up in 2018, though the pace of sales and the average closing price declined significantly from the year before.
“Purchasers have more opportunities to select among many properties — they know they have choices, so they’re taking their time,” said Susan M. de França, the chief executive of Douglas Elliman Marketing.
Developers also had to contend with fewer international buyers, who in past years were active in the new-construction sector. Some foreign buyers now face tighter restrictions for moving money out of their home countries, particularly in China.
To help facilitate sales, developers were more willing to negotiate prices. “When the inventory level was tight, you would never hear the word ‘negotiation’ in the development market,” Ms. de França said.
Within the Corcoran Sunshine Marketing Group’s portfolio of new developments, for instance, about three-quarters of the deals were negotiated, on average, for 7.4 percent below the asking price, said Kelly Kennedy Mack, the group’s president. Less common were purchases during early stages of construction (with the exception of the higher-profile buildings), she added.
Developers were also willing to offer more incentives, Ms. de França said, absorbing some closing costs or adding in “a storage room or a wine cellar in the top of the market.” In recent weeks, Extell Development even offered to pay three to five years of common charges for purchases made by year’s end.
The CityRealty report projected that in 2018, 1,050 units would be sold in Manhattan’s two dozen or so new developments, reaching $5 billion in total sales — a drop from the 1,848 units and nearly $9 billion in sales in 2017. The average price fell to $4.54 million from $4.79 million in 2017, and a record $5.16 million in 2016.
Among the year’s most active developments was 160 Leroy Street in the West Village, where nearly all 57 residences sold. Its priciest sale was to Michael Rubin, the chief executive of the e-commerce company Kynetic. He bought a penthouse for $43.5 million, which was below the $51 million list price. Also, One West End Avenue, on the Upper West Side near 60th Street, saw more than a quarter of its 246 units sell. Notable buyers included the actor Bruce Willis and the New York Yankees pitcher Aroldis Chapman; each acquired a four-bedroom for more than $7 million.
Three new limestone condos designed by Robert A.M. Stern Architects — 70 Vestry Street in TriBeCa, 520 Park on the Upper East Side, and 220 Central Park South in Midtown — saw a flurry of late-year closings. At 70 Vestry, a penthouse sold for $56 million, and 520 Park had several $20 million-plus closings in addition to the year’s two biggest sales. But 220 Central Park South, near Columbus Circle, is likely to be 2019’s superstar. Already, nearly 85 percent of its units are spoken for, according to the developer, Vornado Realty Trust, and the building is expected to surpass all city rankings with the sale of a penthouse listed for $250 million.
While many top sales in 2018 were at brand-new developments, there were several pricey closings at buildings that have been around for a while.
A penthouse on the 85th floor of One57, at 157 West 57th Street in Midtown’s Billionaire Row, sold for nearly $54 million — though below its original $70 million price from 2017.
At 432 Park Avenue, also on Billionaires’ Row, between 56th and 57th Streets, two separate buyers, including the prominent art collector Hillel Nahmad, each paid a total of $60 million for pairs of half-floor apartments, presumably to combine them. The building, completed in 2015, remains the city’s most expensive building, with the average price per square foot at nearly $6,000.
And at 15 Central Park West, another Robert A.M. Stern limestone condominium, a duplex owned by the British musician Gordon Sumner, a.k.a. Sting, sold for $50 million, after a year on the market and an 11 percent price cut. (Sting and his wife, Trudie Styler, are reportedly buying a place at 220 Central Park South.)
Among other celebrity closings: The rocker Jon Bon Jovi sold a duplex at 150 Charles Street for $15 million, and the comedian Seth Meyers sold an apartment at 302 West 12th Street for $4.4 million. Both are in the West Village.
For all of Manhattan, the average sale price for an existing condo unit fell to $2.91 million from $3.05 million in 2017, according to CityRealty’s projections (though it’s still more than $1 million above the average 10 years ago).
“In some parts of the market, it is definitely a buyer’s market,” said Steven James, the chief executive of Douglas Elliman New York City. But he noted that sellers still have the upper hand in some neighborhoods, particularly downtown. In the West Village and NoHo, for example, prices per square foot were up around 10 percent from a year ago, according to CityRealty.
Co-ops, which make up a major chunk of Manhattan’s housing stock, also saw weakened sales volume in 2018, although average prices were slightly higher than the previous year.
A total of 5,838 units were expected to close through the end of the year, according to CityRealty, a 15 percent drop from the 6,267 closings in 2017. The average price was $1.40 million, up from $1.37 million.
Kirk Henckels, the director of Stribling Private Brokerage, said co-ops were better positioned in 2018, after price adjustments the previous two years. “They came down roughly 15 to 20 percent,” during that time, he said. “They were increasingly a value compared to the condos.”
The year’s most expensive co-op sale was at 995 Fifth Avenue, across from the Metropolitan Museum of Art, at 81st Street. An apartment encompassing the 15th floor was sold for $35 million by Joseph J. Plumeri, the vice chairman of the board of directors at First Data, a financial services company.
There were numerous other notable closings. At 1 Fifth Avenue, near Washington Square Park, in Greenwich Village, the Rolling Stones guitarist Keith Richards sold a $9 million duplex, while the actress Jessica Lange was poised to create one after paying $3.3 million for a unit above her apartment there. On the Upper West Side, Mr. Willis sold a duplex at 271 Central Park West, at 87th Street, for $17.8 million. And across town, the record and film executive David Geffen sold a unit at the Park V, at 785 Fifth Avenue, between 59th and 60th Streets, for $24.5 million.
The Beresford, at 211 Central Park West, between 81st and 82nd Streets, also saw plenty of activity. The hedge fund manager William Ackman deeded to his former wife a duplex valued at $15 million, as part of an apparent property settlement. And Bob Weinstein, the younger brother and business partner of the disgraced Hollywood producer Harvey Weinstein, sold a duplex for $20.5 million.
Some of the year’s most expensive closings were at townhouses, but like condos and co-ops, many of the transactions came with discounts.
The biggest sale, at $40.25 million, was a 36-foot-wide house at 110-112 East 76th Street. The structure, originally listed for $51 million, was the largest of a trio of townhomes created from six brownstones by the developer Joseph Chetrit.
Among the many other Upper East Side sales, the former Vanderbilt mansion, at 16 East 69th Street, sold for $39 million. And the six-story mansion at 4 East 74th Street, once home to the pop star Michael Jackson, was sold for nearly $32 million by Marc Lasry, the billionaire hedge fund manager and co-owner of the N.B.A.’s Milwaukee Bucks.
And Roman Abramovich, a Russian oligarch who owns the Chelsea Football Club of London, transferred four townhouses on 75th Street to a former wife. He also threw in two co-ops in a deal totaling $92.3 million.
Downtown, a Greek Revival house at 37 West 10th Street in Greenwich Village sold for $37.2 million. In the West Village, Harvey Weinstein sold his townhouse at 13 Bank Street for $25.6 million.
“Brooklyn has been one of the hottest submarkets in New York,” Ms. de França of Douglas Elliman said, adding, “Some people who are priced out of Brooklyn are coming back to Manhattan.”
In Brooklyn Heights, a townhouse sale at 140 Columbia Heights tied the record for the highest price paid for a single residence in the borough, at $15.5 million. The buyers were believed to be the actors Jennifer Connelly and Paul Bettany.
A neighborhood record was also set in Bedford-Stuyvesant, where the brownstone at 247 Hancock Street sold for nearly $6.3 million, above the $6 million asking price.
Brokers saw strength in new Brooklyn condos, too. Ms. Mack of Corcoran Sunshine noted, for example, that Cobble Hill House, one of several new projects in the Cobble Hill neighborhood, was 60 percent sold just two months after sales began in September.
Emerging markets like Bushwick and Greenpoint are also showing strength, added Rory Golod, the New York general manager for Compass, and are likely to rise in value in future years.
Looking ahead to the coming year, the market will “continue a slow price correction,” said Gregory J. Heym, the chief economist of Terra Holdings, parent of Brown Harris Stevens and Halstead Property. At the same time, he said, New York City should remain fiscally sound with low unemployment, as it enters a 10th consecutive year of economic growth.
CityRealty forecasts that average apartment prices in Manhattan will rise slightly in 2019, to around $2.2 million, based on units under contract and anticipated closings in buildings like 220 Central Park South. Several other much-anticipated condominiums will officially open, among them: 15 and 35 Hudson Yards; Waterline Square; One Manhattan Square; and 111 West 57th Street.
Published at Fri, 28 Dec 2018 15:43:35 +0000