Bloomberg News

Manhattan Trophy Home Sellers Test Buyer Limits on Price

February 13, 2014

Manhattan’s 15 Central Park West

15 Central Park West, a luxury condominium building, in New York. Photographer: JB Reed/Bloomberg

Broker Alon Chadad’s client purchased a $14.3 million apartment on Manhattan’s Central Park South, then spent nine months seeking approval for plans to overhaul it. In January, the buyer changed course, listing the unit for sale at more than double what he paid just a year ago.

“He filed all the documents for renovation and he was ready to go and he decided, ‘You know what? I see opportunity in the market,’” said Chadad, co-founder of Blu Realty Group and the agent for the 6,160-square-foot (572-square-meter) condominium, which has an asking price of $29.5 million.

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Luxury-apartment owners in New York are listing a record amount of properties for sale, testing the upper limits of what buyers are willing to pay even as median prices remain off their peak set almost six years ago. Sellers have taken notice of a handful of record-shattering deals, triggered by an $88 million purchase at 15 Central Park West, and demand for trophy homes by international investors seeking havens for their cash.

There were 145 Manhattan residences listed for more than $20 million last year, the most in records dating to 2005, according to data from StreetEasy.com, a real estate website owned by Zillow Inc. (Z:US) The average asking price per square foot of those homes was $4,977, 18 percent more than the year before and also the highest on record. Two resellers are asking at least $100 million for their properties.

Below Peak

Such sky-high valuations may not fully reflect the market. While the number of apartment sales for more than $10 million -- about the top 1 percent -- more than doubled last year, the median price of those transactions was $13 million, or 7.9 percent less than such properties sold for in 2008, the year Manhattan residential prices peaked, data from appraiser Miller Samuel Inc. show.

“There’s definitely an argument to be made that some apartments are asking prices that make absolutely no sense whatsoever,” said Leonard Steinberg, a luxury broker with Douglas Elliman Real Estate in New York. “Everybody wants $100 million for their apartment these days. The good news is that $100 million is, what -- 60 million pounds? Only 73 million Euros? So on world standards, it’s still a pretty good buy.”

The $88 million sale, by former Citigroup Inc. Chairman Sanford Weill two years ago, was the “starting gun” for the current frenzy, according to Jonathan Miller, president of Miller Samuel. The 6,744-square-foot, four-bedroom condo -- featuring a wraparound terrace, two wood-burning fireplaces and a library -- was purchased for the daughter of Russian billionaire Dmitry Rybolovlev. The transaction is still Manhattan’s most expensive residential deal and it’s become a symbol of what wealthy buyers are willing to spend for a unique property, Miller said.

One57 Contracts

Since then, two contracts have been signed at more than $90 million each for condos at Extell Development Co.’s newly built One57 tower in Midtown. Bill Ackman, founder of New York hedge-fund firm Pershing Square Capital Management LP, is part of an investor group that agreed to purchase one of the apartments, a duplex spanning the 75th and 76th floors of the 90-story skyscraper.

A penthouse at nearby 432 Park Ave. found a buyer who agreed to pay $95 million. Buyers in the tower, set to be Manhattan’s tallest residential building when finished, have come from around the world, including South America, the Middle East, China and Russia, according to developers Harry Macklowe and CIM Group.

Walker Tower

A 5,955-square-foot, full-floor penthouse atop the Walker Tower in Chelsea sold last month for $50.9 million, a record for an apartment south of 34th Street. The unit went under contract in October, a month after it was listed with a $55 million asking price. The five-bedroom condo, on the 24th floor of a redeveloped former Verizon Communications Inc. building, has three fireplaces, 479 square feet of outdoor space and “360-degree unobstructed views,” according to the listing.

Such high-profile deals are anomalies, according to Miller.

“It’s escalated into this trophy phenomenon which was really just a handful of sales, but it’s these half-dozen sales that everybody points out,” he said. “It gives the impression that it’s commonplace. It washes over everything else, like a magic blanket that we lay over the market and everyone feels better.”

$100 Million

The first $100 million listing emerged in July 2012, when Steven Klar, a Long Island developer, decided to sell his triplex at Midtown’s CitySpire tower, listed as the highest terraced residence in the U.S. It’s still on the market at that price and is Manhattan’s most expensive resale listing after a gut-renovated, 19-room East Side townhouse whose owners are seeking $114 million. The townhouse was bought in 2005 for $20 million, according to StreetEasy.

Other resellers trying their luck in the market include designer Tommy Hilfiger, who in October listed his custom apartment at the Plaza for $80 million, a price that would shatter the previous record of $48 million paid for a unit at the building on Central Park South.

“Not everyone will dare to ask those kinds of prices” unless the properties are “very, very special,” said Charlie Attias, a Corcoran Group broker who has arranged deals in buildings such as the Plaza and represented shoppers from countries including France, Switzerland and Luxembourg. “Buyers are not stupid, they’re educated about the market,” he said.

Sellers of Manhattan homes priced at $10 million or more in 2013 had to whittle about 15 percent from their original asking prices to strike a deal, up from a 10 percent cut in 2008, Miller Samuel data show. Properties in that range spent an average of 347 days on the market, the most since 2007.

Price Cuts

For apartments priced at $20 million or more, the average price cut was 12 percent last year, compared with 15 percent in 2008, according to StreetEasy.

Steven A. Cohen, the billionaire founder of SAC Capital Advisors LP, is still seeking a buyer for his 9,000-square-foot penthouse at One Beacon Court, on the market since April. He initially sought $115 million for the duplex -- the only one in the 53-story tower, according to StreetEasy -- for which he paid $12.9 million in 2005.

In December, he knocked down the price to $98 million, or $10,888 a square foot, for the four-bedroom property, described in the listing as “a unique NYC treasure” with interiors designed by Charles Gwathmey. Two walls of windows in its double-height living room overlook Midtown and Central Park.

Cohen’s brokers, Deborah Grubman and David Dubin of Corcoran Group, declined to comment.

Pierre Hotel

A five-bedroom penthouse spanning the 41st through 43rd floors at the Pierre Hotel on Fifth Avenue is on the market for $95 million, down from April’s asking price of $125 million, according to StreetEasy. The triplex co-op has four adjoining terraces, five fireplaces and includes the hotel’s original ballroom.

To justify a stratospheric price, “you just best have a product -- an apartment, a house, a co-op -- that truly has unique features so that buyers can fall in love with it,” said Paula Del Nunzio, a luxury broker with Brown Harris Stevens, whose listings include a five-bedroom condo at 15 Central Park West.

The seller of that property, Leroy Schecter, chairman of metalworks firm Marino/Ware Industries Inc., initially sought $95 million. Eighteen months and at least two price cuts later, he changed brokers and now is asking $65 million.

Unobstructed Views

The 6,000-square-foot-unit, a combination of two apartments on the 35th floor in the westernmost “tower” portion of the dual-building limestone complex, has unobstructed views of Central Park and the Hudson River, Del Nunzio said.

It’s the largest available home at 15 Central Park West, where original buyers in 2007 and 2008 saw the value of their investments double on average in 2012, the year Weill and his wife sold their condo at twice their $43.7 million purchase price.

“This building is a micro-market all unto itself,” Del Nunzio said. “Other buildings are trying to compete, but this building is proven gold.”

Schecter’s asking price, at $10,833 per square foot, is less than the record-high $13,049 a square foot that Weill got for his apartment on a lower floor, according to Del Nunzio.

New York is No. 1 on a list of the world’s “cities that matter” to high-net-worth individuals, according to the 2013 “Wealth Report” by Knight Frank LLP, a London-based property consulting firm. The city’s real estate has come “to epitomize the so-called safe-haven market, with overseas buyers looking to escape currency, economic, political and security crises by putting equity into tangible assets.”

United Nations

Builders seeking to capitalize on that demand include Arthur and William Lie Zeckendorf, who are completing a 43-story condo tower across from the United Nations Secretariat headquarters in Midtown. Their firm, Zeckendorf Development Co., started marketing the units in October.

Prices range from $2.2 million for a 1,147-square foot one-bedroom unit to $100 million for a 15,597-square-foot triplex penthouse that includes an infinity pool, 14 bedrooms and a 10,000-pound stainless-steel staircase connecting each floor.

The Zeckendorfs, who also developed 15 Central Park West, decided to combine two units to create the penthouse after they gauged strong demand for larger properties.

‘Right Thing’

“With buyers from all over the world increasingly present in the New York market, many of whom live in residences that dwarf even the most luxurious Manhattan apartments, having the option to create a 15,000-square-foot apartment seemed like the right thing to do,” Arthur Zeckendorf said in an e-mail. “And the price just happened to be $100 million.”

The penthouse is also available as a duplex for $70 million.

Chadad’s client, who had planned to custom-build a pied-a-terre at his 5-bedroom apartment in the Trump Parc tower, saw there were few large units on the market that offered direct Central Park views, and none were listed for less than $30 million.

“If you look at everything that’s available, we’re still way below the average,” Chadad said of his $29.5 million listing, which works out to about $4,788 a square foot.

Klar set the $100 million price tag for his CitySpire penthouse based on what he said is the property’s most unique feature: wraparound balconies on all three levels, which span the tower’s 73rd to 75th floors.

“It’s the highest-terraced apartment in North America,” he said.

Bachelor Pad

The 8,000-square-foot apartment, which Klar bought as a bachelor pad in 1994 for about $4.5 million, has been on the market for about 18 months. The developer, now married and with a 6-year-old son and a primary home on Long Island, decided to sell after his wife suggested that such high terraces aren’t appropriate for a residence where small children play, Klar said. He plans to find another place in Manhattan without a balcony.

For now, he’s in no rush to find a buyer and is enjoying panoramic views that include ice skaters in Central Park. If he gets his asking price of $100 million, that would work out to about $12,500 a square foot, he said.

“Somebody’s going to break the $100 million mark,” Klar said. “I’m not sure it’s going to be me, but New York is primed and ready for the wealthy to put their dollars where it makes the most sense, where it’s safest, where it’s exciting, where it’s worth the money.”

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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