Out of all the areas of the Manhattan real estate market affected by the recession, the one hit hardest was new construction. How bad has it been? To put it bluntly, there hasn’t been any. Well, barely any. Now, the consequent shortage of high-end luxury condos in Manhattan is pushing up prices and frustrating buyers. There are fewer luxury apartments up for sale - only 377 condos priced above $1,500 per square foot went on the market this year - and those apartments are more expensive than ever. Meanwhile, 540 units in Manhattan priced $4 million or more were sold this year, so inventory is still declining. It’s no surprise then that the average PPSQ for a luxury condo in Manhattan is $2,074 according to Jonathan Miller, chief executive of Miller Samuel Inc. That average is up 9% from last year, and all signs point to a sustained rise.
The frustration of looking for a luxury condo when there are barely any available hasn’t stifled demand among buyers. On the contrary, demand is higher than it’s ever been; wealthy locals and international buyers who are deeply unsure of what to do with their money are looking to Manhattan luxury real estate as the most obvious investment choice. Granted, many of them are choosing to rent in lieu of buying, but there is still an “unprecedented demand” according to Kelly Mack, president of Corcoran Sunshine Marketing Group. This demand is increasing the number of projects in the works - an average 712 units are expected to come on the market in the next few years - but the amount of new projects still pales in comparison to pre-recession growth.
While buyers are having a tough time, sellers have it easy. At 41 Bond Street in NoHo, all 7 of the full-floor residences sold for between $5.2 and $8.3 million. Even more tellingly, those luxury condos sold in less than a month. At The Laureate on the Upper West Side, sales launched in March, and now 85% of its luxury condos have sold for an average of $6.5 million. And after opening its sales office less than a month ago, half of the 42 luxury condos at 130 West 12th Street in the West Village have already sold despite the fact that it won’t open for at least a year. Developers are encouraged by this situation, but the old plans that they’re unearthing to take advantage of this trend are still, for the most part, years away. For the time being, expect the high-end of Manhattan’s luxury condo market to stay slim and pricey.