I remember fondly back in 2006 or 2007 when the $1000 per square foot barrier was being broken again and again all around Manhattan in the condominium market.
Fast forward a decade, we are seeing a range of prices for resale condominiums in the range of $1300, $1400, $1600 per square foot for run-of-the-mill renovated condos, on up to $2500-3000 for top-flight buildings, and $4000-6000 per square foot for the most exclusive projects.
New Development, on the other hand, has been operating in its own portion of the atmosphere.
Buildings such as 220 Central Park South report contracts signed for units in the $10,000 per square foot range, and buildings like Jean Nouvel’s 53 west 53rd asking north of $4500 per square foot (with no signed contracts that I can see, by the way).
If we lower our gaze, ever so slightly, to the new developments positioned for New Yorkers who are buying them to actually live in, I went to visit two HFZ projects recently, 505 West 19th Street along the Highline, and 88-90 Lexington Avenue, on 26th and Lex.
Let’s put aside that I’m still convinced that co-ops are an absolute bargain, with many selling in the $1000-1200 per square foot range all around the city (if we can use that metric on an apples-to-apples basis…).
Of course, cooperatives do not make sense to purchase in many cases, whether someone is an investor, someone with high income and lower assets, someone is trying to purchase for their younger adult child, someone thinks he or she is going to move for work in a few years and wants to rent out the unit, etc etc.
I spent some time in one in the East Penthouse (PH1) at 505 West 19th Street, a building I had written about two years ago when I visited the sales office.
This full-floor unit, while not boasting the views of a sky-high project like 111 West 57th Street, or the River views of a 551 west 21st street, did offer a prime position along 10th avenue and the Highline.
From the art-filled lobby, installed directly under the Highline, to the stunning Penthouse outdoor space, one can feel the exclusivity of this boutique condo from the entrance forward.
Lavish finishes, sumptuous kitchen, decadent master bath, floor-to-ceiling windows- the unit feels like a house that stretches all the way around, with endless bedrooms, closets, and baths.
With common charges that hover around $2.90 per square foot, and a current asking price of $3584 per square foot ($19.95mm), this seems like a smartly-priced penthouse- compared to much of what’s out there.
That said, the lower floor units in the building are asking just under $1900/square foot, with 10% lower monthly charges.
Then, this week, I visited 88-90 Lexington Avenue, a Prewar office conversion that had been a rental building for many years, I was curious to see how the buildings would differ from 505.
Frankly, I was surprised.
The finishes at 88/90 seemed a lot more similar to HFZ’s project at 301 west 53rd than to 505 w 19th.
The question to me, then, is this:
What do you really get for $1900-2000 per square foot?
In the case of 301 west 53rd Street, at $1850/square foot you are getting 8’ ceilings, small, boxy
rooms and small windows.
$2/month carrying charges for tax/common charges and an upgraded amenity package.
Engineered, pre-finished floors, small, efficient baths, and small living rooms.
In 88/90 Lexington, you are getting a ever-so-slightly upgraded level of finishes, the same floors but perhaps an inch wider plank.
The same white glass/white quartzite counters, an upgraded appliance package, loft-like ceiling height, and a location of 26th and Lexington that is definitely not NoMad.
It has been called Curry Hill (a reference to Murray Hill), because of the multiple delicious Indian restaurants within one block of that location.
I believe it’s really Kips Bay.
And charges of about $2.40 per square foot per month between taxes and common charges.
It seems that, other than Harlem, where there is still a terrific 20- or 25-year tax abatement to take advantage of, where you see monthlies in the range of $1.50 per square foot, carrying charges are all in this range.
Is it any wonder that buildings like 389 East 89th Street, asking $1500/square foot, are selling MUCH faster?
Further, is it any wonder that there is some trepidation about projects like 100 East 53rd Street, which are asking $3000 per square foot or more (and aren’t showing any signed contracts)?
My takeaway is that buyers will be looking for a bit more if they are going to pay $2000 per square foot, or some discounts are in store.
It would seem that new development will need to embrace the active buyers who are probably going to be expecting the latter.
Especially as rental prices are softening- which will make investors more wary about what returns they can expect from their one-off condo purchases.
And further, with over 200 2-bedroom resale and new development condominium units on the market in downtown Manhattan alone, and only 5% of those units going to contract this July, it would seem that there’s a bit too much inventory not to push downward pressure on pricing.