A common misperception on the part of sellers is that resale apartments and new development are received in the same way by the marketplace and should be priced the same as new development. For better or worse, this is almost never the case.
I suppose that it’s almost always for the worse, from the perspective of the seller, who wants their 30 year-old building to fetch prices exactly the same as the brand new, ground-up construction. I must call to your attention that the phrase “ground up” as relates to new development may have a different meaning than it’s meant to, if the market goes sideways or down. “Ground Up from the Ground Up” or some kind of title for an article…
What I see is that sellers want their properties to be sprinkled with some New Development Fairy Dust, because New Development does get much better pricing. Buyers are enamored by new. This has rung true for my entire career. As long as a building doesn’t have massive litigation, or a dearth of sales, they should get to get some kind of premium.
I haven’t spent a lot of time in the past year or so writing about new development. Why is that? I suspect that it has been a combination of not seeing as much new development in the past few months (COVID) or just not being impressed with very much, or that I felt that new development pricing had gotten out of line with market pricing, even factoring in the above.
Further, I have noticed that most new developments have not been able to rely on location to drive sales. That is, they have been on lesser blocks, second- or third-tier sites, etc.
Even when the buildings are incredibly impressive, not every building can be the game-changer in a neighborhood, or the tipping point for a specific location to complete a neighborhood, send it soaring, what have you.
I have also heard the pounding of the same point when calling out certain developments that I’ve felt hit the mark and are worth seeing, but some buyers push back on location: 200 Amsterdam, 200 e 95th (The Kent), 212 West 95th (Dahlia), and others.
Now there are two that I’ve seen that are on my radar, that have strong pricing, but are located at what a developer has dubbed “The Corner of Main & Main” meaning they are really situated as perfectly in the center as they could be, in their respective neighborhoods. I just had the chance to visit (virtually) The Waldorf Astoria’s sales office (50th and Park Avenue), and toured the building at 212 West 72nd Street, a rental-to-condo conversion that had been dubbed “The Corner” – since it is located at the corner of 72nd and Broadway.
The question is this: Will people pay a premium for these locations? Usually, you don’t get as much visibility into that question, but here we know that renters had paid $150,000 PER MONTH to have a large 3bedroom at the Waldorf, or had even more recently been paying $150 per square foot to rent at the Corner. That premium is impressive, and is unlikely to fade that much- even if it will be slightly lower to keep pace with a softer rental market. To put in context, a 1000-square foot 2-bedroom apartment will rent for $12,500 per month.
For those who are considering investing in these properties and not living in them, this insight is helpful and crucial. For those who are looking to purchase to enjoy, The Waldorf is in a class of its own. The world knows it as the most recognizable hotel property perhaps in all of the United States. It will fetch a premium, to be sure. What this will be is still unclear, but no one is buying this property to get a “deal.” They are buying to have a piece of history. And to enjoy it whenever they come to town. Long-term renting here for some will be a delight. I’m going to leave it there, for now.
Looking at 212 west 72nd and the pricing for the large apartments- in the $2500-2850/square foot range, I have to look to other properties nearby that sold for similar levels, wondering what the location add-on will be. We can look at lesser locations like 207 west 79th street, which thankfully helped this block tremendously, but with a smaller size could never offer up the level of amenities that a building like 212 w 72nd could offer. Other buildings like 221 West 77th Street or its sister across the street at 210 West 77th Street are well-designed and in their own way beautified their blocks meaningfully. But they don’t offer the same location, either. The best-selling 2019 condo was 15 West 61st, which was designed and built as a rental and then converted- and knocked it out of the park.
I would argue that 61st has an audience more geared to couples than families- and this site (SW corner of Broadway and 72nd) has a fabulous openness and light that you almost never find except along Central Park West or Riverside Drive, which have their own well-documented premium. Light all day long, air and a view along two wide streets.