Manhattan Condos (And Their Prices) Get Sky High
Sales at One57 and 432 Park Avenue, amplified examples of a phenomenon, indicate that we are without a doubt, experiencing a residential real estate high. Extell Development's famed One57 sold a penthouse for a record-breaking $90 million, though the building now barely holds onto its "tallest residential tower" title in Manhattan. 432 Park Avenue, which will claim One57's short lived title, has submitted a plan to increase asking prices for its condominium units to $5,800 per square foot, but given the most recent examples, developers have no need to be cautious before instituting a double digit price increase three years before construction is complete. Manhattan condo prices continue to climb as steeply as the megastructures themselves, and even a $5,800 per square foot condominium will sell itself.
Undoubtedly, buyers are more than ready to claim properties hot off the market. As rent continues to increase, hitting a record $3,459 average a month in July according to Citi Habitats, the incentive to buy does as well. Unfortunately, according to Crain's New York, construction on all housing units is approaching one of the lowest points since the 1960's. Demand continues to grow as foreign and domestic buyers also seek to preserve wealth in Manhattan condominiums, but the city is simply short on inventory.
Coupled with the Federal Reserve's announcement to stimulate the housing market as a means to boost employment and a decrease in co-ops and condos on the market as homeowners wait for property values to continue to climb, local residents who are currently renting are finding it difficult to buy. According to Corcoran Sunshine, "sales of new apartments are expected to outpace additions to supply through 2015," especially for two to four bedroom units in already saturated neighborhoods.
Even without buyer incentives, hundreds of people are signing up in advance to view developments before condo plans have been approved and shown, and units are selling at the full asking prices with double-digit increases. Since developers will begin marketing next spring or fall, Terra Developing Marketing projects that initial asking prices will increase by 3% to 10% upon completion.
As plans and proposals for residential superstructures out of fantasies, LEED-certified, and rehabilitated condo-conversions in historically rich districts continue to flood headlines, popular interest reaches a peak. With the additional incentive of increasing rental prices, those who had been previously been hesitant to buy are now turning to Manhattan real estate as a means of wealth preservation and investment. The frenzy that enabled the success of the reality-television show Million Dollar Listing New York is hardly an exaggeration; in fact, Prudential Douglas Elliman broker Frederik Eklund reported to Crain's that he sold all but two of the units at a condo conversion in Tribeca within one week on the market. Neighborhoods like Chelsea, Tribeca and the Financial District continue to shatter sale records downtown.
Property in Manhattan, specifically in condominiums and residential real estate, has proved itself a safe haven among declining value in retail and office listings. The future of Manhattan condominiums aims for the sky, so prepare for those prices to get sky high.