CreditCreditBrad Dickson for The New York Times
More than 20,000 new apartments in New York, both for sale and for rent, will open their doors this year — and likely just a fraction will find residents by year end.
The affordable ones, of course, will attract thousands of applicants, but the bulk of the new units — in gleaming towers, many of them conceived at the height of the last housing boom — will enter a saturated market, where buyers and renters have ample choice and little incentive to rush.
At the current rate of sales, it will take more than six years to sell all of the new development in Manhattan alone, which totals almost 8,000 units, said Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers and Consultants.
The pace of sales has already slowed coming into the new year, with homes seeking $4 million or more taking an average of 447 days to go into contract in 2018, according to Olshan Realty. In the halcyon days of 2013, similar homes spent only 172 days on the market.
Suffice it to say that newcomers will have much to prove in 2019. In Manhattan, where developers bet big on Far West Side and downtown sites, in areas unaccustomed to hulking towers, proof of concept will rest on the pace of sales — and most everyone is being tight-lipped about numbers. In Brooklyn, the impending partial L train closure could damage recent momentum in the rental market. And in Queens, awash with ambitious towers even before the announcement of Amazon’s campus, the new year will begin to untangle hype from reality.
That’s good news for buyers and renters who can afford the expensive new offerings, and if the market slumps further, perhaps a boon for those seeking lower prices still.
The Times asked Localize.city, a data company that focuses on New York housing, to search city building records for residential projects that have been under construction for more than two years. Some may drag into 2020, but the majority are expecting move-ins this year, and many of the condos have been quietly selling units based on floor plans for months or even years.
Out of 28,513 anticipated units, roughly 20,000 will be ready by the end of the year, said Israel Schwartz, a data analyst with the company. That’s about the same as last year, and down from the peak of 25,000 units in 2017, but still higher than in the bullish years of 2012 to 2015, when demand outpaced supply and 14,000 units on average were completed every year.
Brooklyn will have the most openings overall, with 13,272 apartments across 421 buildings, many of them concentrated in Williamsburg. Manhattan will come in second, with 6,342 units in 79 buildings, followed by Queens, with 6,302 units in 154 buildings. The Bronx, in the early stages of a building boom, and Staten Island will lag behind, with 2,471 and 126 units respectively.
These projects will have to compete with historically high inventory already crowding the market, said Grant Long, the senior economist for the real estate website StreetEasy. As of November, there were 9,425 homes for sale in Manhattan, up 18 percent from a year earlier; Brooklyn had 5,365 units, up 21 percent; and Queens had 3,267 units, a 35 percent jump.
There are outliers, like 220 Central Park South, which began closings last quarter and is hoping to sell a record-breaking $250 million four-level penthouse, but its success doesn’t have much bearing on the rest of the market.
Weakness in the sales market has helped shore up rental demand in recent months, but landlords’ reliance on concessions has continued to grow in all three boroughs, suggesting tight competition and overzealous pricing, according to a recent Douglas Elliman report.
The following projects, a sampling of the largest in the city, will lead the way or darken the path ahead for the next wave of builders.
Betting Big on the Margins
If Billionaires’ Row in Manhattan, a canyon of uber-luxury condos in the heart of the borough, represents the last building boom, the next cycle may be defined by projects that hug the fringes of the island.
Four of the top five new Manhattan projects with the most units are near the waterfront, in areas long ignored by luxury developers.
One Manhattan Square, an 800-foot tower with 815 units, looms over the small neighborhood of Two Bridges, south of Chinatown. Developed by Extell, a company that helped set off the luxury buying frenzy in the last cycle, this project could spur a similar push on the Lower East Side.
Prices at the tower start at $1.2 million for one-bedrooms and just over $3.5 million for three-bedrooms. The unit mix leans toward one- and two-bedrooms — a safer bet than the behemoth apartments that characterized the last cycle, many of which are struggling to find buyers.
There will be more than 100,000 square feet of perks, including a two-lane bowling alley, a hammam-style spa, an adult tree house and an outdoor tea pavilion. The priciest unit currently listed, a $13.18 million duplex penthouse, is under contract, said Raizy Haas, a senior vice president at Extell. Beyond some marquee sales, however, the developer is quiet on progress.
“We’re not doing updates,” said Gary Barnett, the president and founder of the company, but added that he was pleased with sales. Marketing for the tower began in 2015, and according to a 2017 filing with the Tel Aviv Stock Exchange, 100 of the 815 units had sold at the time.
To drum up interest, Extell offered to cover three to five years of common charges in its new buildings, which could amount to tens of thousands of dollars a year on larger units. The promotion was set to end in 2018, but Mr. Barnett said the company may extend the deal. Extell is also paying buyers’ brokers half of their commissions at contract signing, sometimes a year or more ahead of closing — a rare and somewhat risky incentive, as early buyers could seek to back out of their purchases.
Perhaps the project’s biggest perk is a version of tax abatement, no longer available to builders, that covers most of a buyer’s property taxes for 20 years. (In exchange, the developer built about 200 below-market-rate rentals in a building adjacent to the tower, for applicants who make roughly between $34,000 and $57,000.)
The building’s success could influence three luxury rental projects planned nearby. In December, the City Council filed a lawsuit to force a public review of the proposed towers, which range from about 700 feet to more than 1,000 feet, to reconsider the height and unit mix of the towers. (Extell’s project was exempt because it was built as-of-right.)
The developers have promised infrastructure upgrades, including funding for a nearby public housing complex and neighborhood parks, local subway improvements and about 700 new units to be leased below market rate.
But the towers could also bring about 2,100 luxury rentals to the largely lower-income neighborhood, and that would hasten the displacement of longtime residents, said Chris Walters, a rezoning specialist with the nonprofit Association for Neighborhood and Housing Development. And the range of “affordable” units will stretch the meaning of the word, he said, with some reserved for families making more than $100,000 a year.
How the Extell project performs will determine whether other developers take a risk on the neighborhood, said Mr. Long, the StreetEasy economist: “It will seal the fate of what happens with the rest of those buildings.”
West Side Changes
The 15 Hudson Yards building, in a part of the Far West Side of Midtown that has been in the spotlight since its 2005 rezoning, will open its 392 units to the first residents this quarter.
“Hudson Yards seems to be an anomaly, because our traffic is still good,” said Sherry Tobak, a senior vice president of Related Companies, one of the developers. But she declined to offer sales figures. Units in the tower, which has 285 luxury condos and 107 below-market rentals, now range in price from less than $4 million for two-bedrooms to $32 million for the choicest penthouse.
Ms. Tobak admitted to “some degree of concession,” including coverage of the so-called mansion tax, which amounts to 1 percent of the sale price of anything above $1 million. The first listings were offered in 2016, based on plans and renderings.
“I still haven’t seen it,” said Ann Cutbill Lenane, an agent with Douglas Elliman, of the two-bedroom she bought for herself after closing on a similar unit for a client. Ms. Lenane, who went into contract about 18 months ago, said she was impressed by the amenities, including a resident dining room where she will be able to entertain up to 65 people. The project also has a 20-year tax abatement for buyers.
“Did I buy it a little high? Maybe,” she said. But given how many attractions have been built around the tower, including the futuristic Shed cultural center and the nearby High Line, she is confident of its value.
Due north, near the water’s edge of the Upper West Side, three vitreous towers collectively known as Waterline Square are also expecting residents this year. In total, they will add 263 condos and 868 rental units to the site of former rail yards, largely ignored for decades. Developed by GID Development Group, each tower was designed by a different architect, with condos beginning around the 20th floor. Prices range from $1.925 million for one-bedrooms to $17.25 million for penthouses, but the bulk of the units are two-bedrooms starting at around $3 million. Here, too, buyers will receive lengthy tax abatements.
“It’s been difficult to get deals done this year,” said Melissa Ziweslin, a senior managing director at Corcoran Sunshine Marketing Group, which is marketing the towers. Starting last spring, agents who brought buyers were given a 4 percent commission, higher than the standard 3 percent, she said, as an added incentive.
Even with the slowdown in 2018, Ms. Ziweslin said, the units were selling at an average of $2,549 a square foot, or about 25 percent higher than those in nearby buildings.
A Test for Williamsburg
The luxury rental project at 420 Kent, part of an 857-unit complex on the South Williamsburg waterfront, will be the largest to open its doors in Brooklyn this year. About half of the completed units are spoken for, said David J. Maundrell, who is leading the marketing with Citi Habitats New Developments, but would not say how many units that represents. Prices range from $2,350 a month for studios to more than $10,000 a month for the largest apartments.
The blocky three-tower complex, developed by a company owned by Eliot Spitzer, the former governor of New York, will have two rooftop swimming pools, a landscaped garden and a waterfront park on the East River. A subsidized ferry service to Wall Street and Midtown departs nearby.
“We had people wanting to give us sight-unseen deposits,” Mr. Maundrell said, adding that weakness in the sales market has attracted some would-be buyers who could have decided to rent instead.
But in April, the L train, a major artery for the fast-gentrifying neighborhoods along its route, will partly shut down for 15 months of repairs. That could hurt a number of projects opening in 2019, including 420 Kent, which relies on the only viable alternative for many Williamsburg commuters, the JMZ subway lines.
“All of those lines will be a lot more congested,” said Mr. Miller, the real estate appraiser. With the added headaches, he said, “people may just look elsewhere,” as renters have a wealth of new options hitting the market.
In November, 46.5 percent of rentals offered concessions in the form of free rent or discounted broker fees, up from 18.6 percent a year earlier, Mr. Miller said. And of the new units that were leased in November, nearly 80 percent offered sweeteners. The median rent, after concessions, was $2,736 a month, down 0.7 percent from the previous year.
A Shot in the Arm for Queens
The impending arrival of Amazon’s New York campus in the Queens neighborhood of Long Island City has agents and developers hoping the buzz will translate to deals. But even before the announcement, the area was primed to have the most new units of any market in the city: almost 2,220, across 23 buildings, to open by year end.
After 2019, Long Island City will continue to lead residential building citywide, with 5,125 more units expected in the years to come; the only market to approach that number is Williamsburg, with 3,437 units.
“It’s like Williamsburg was five or six years ago,” said Jerry Wolkoff, the developer behind 5Pointz, the beloved street-art haven being converted to luxury rentals. (A group of artists won a $6.7 million judgment last year after Mr. Wolkoff whitewashed their murals without notice in 2013; Mr. Wolkoff, who had allowed the artists to paint there for years, is appealing the decision.)
The rental tower, which will retain the 5Pointz name, will have about 1,115 units, with 500 to 700 ready for occupancy this summer, he said. Pricing hasn’t been established, but 20 percent of the units will be below market rate.
Is Mr. Wolkoff worried about overbuilding or some residents’ distaste for how the tower was erected? “It will rent itself, because of the amenities and what I’ve done with the building,” he said, adding that new commissioned graffiti will be displayed throughout the project.
The building frenzy has also spilled over into neighboring areas of western Queens, like Astoria, where the Durst Organization is building a seven-tower complex, near the banks of the East River, called Halletts Point. The first tower, a 22-story, 404-unit brick building, in which 20 percent of units will be below market rate, will open around March.
The building, with unobstructed views on all four sides, will have mostly studio and one-bedroom apartments, with a smattering of two- and-three bedrooms, said Jordan Barowitz, the company’s vice president of public affairs.
The Amazon news “is definitely a shot in the arm for Halletts,” he said, but added that the company isn’t counting on that in the short term, as only several hundred Amazon employees will report to Long Island City in 2019.
Still, the move is a tantalizing, if mainly symbolic, prospect for builders coming to market this year.
“It’s a quick commute to Astoria from Anable Basin,” he said, referring to Amazon’s proposed base in Long Island City, still years away.
Published at Fri, 04 Jan 2019 16:38:02 +0000