Stephen G. Kliegerman
President of Development Marketing
By Sharon L. Crenson and Brian Louis
Homebuilder Toll Brothers Inc. opened sales of its first condominium building in Manhattan, the most expensive urban market in the U.S., as waning demand for its suburban luxury homes crimped earnings.
Toll, which sells houses for three times the average U.S. price, on Aug. 22 reported a 19 percent drop in fiscal third- quarter profit, its first decline in four years. Sales to the public will commence this weekend, the company said.
The median price of new homes in the U.S. was $237,000 in August, up .34 percent from $236,200 a month earlier, according to the U.S. Census bureau. The median price of Manhattan condos rose 1.5 percent to $990,000 in the second quarter from $975,000 in the first, according to Miller Samuel Inc., the biggest Manhattan appraiser.
``There's no doubt that real estate is down but certain markets are doing well,'' said Chief Executive Officer Robert Toll in an interview at the building's Manhattan sales office. ``New York has not gone down as the rest of the market has.''
The Toll building, a 21-story blue-green glass building at 110 Third Ave., is just south of Union Square Park in Greenwich Village. Toll, based in Horsham, Pennsylvania, began selling the condos to insiders on Sept. 28. Prices for the 77 units range from $887,990 for a one-bedroom apartment to $2.04 million for a three- bedroom unit with floor-to-ceiling windows, according to the development's Web site.
It's the first Manhattan project for Toll, which also is building in Long Island City, Queens, Williamsburg, Brooklyn, and Hoboken, New Jersey, across the Hudson River from Manhattan.
`Finally' in Manhattan
``It thrills me to finally be in Manhattan,'' said Toll, who has owned New York apartments for himself and his family since 1980. He currently owns an apartment on the Upper East Side and has reserved a penthouse in the new building.
Toll's arrival in New York to christen the new development comes a day after a small plane crashed into a luxury high-rise on the East River. Robert Toll, 65, founded the company with his brother Bruce in 1967.
Construction workers have completed the building's exterior shell while the interior is still skeletal. Apartments are expected to be move-in ready in the second or third quarter of next year, said Robyn Kammerer, communications director for Halstead Property, which is handling sales.
Stephen Kliegerman, executive director of development marketing for Halstead, said the brokerage has about a half dozen signed contracts. He said while Manhattan's prices may be maturing, the market's fundamentals are strong.
``It shows incredible faith in the New York City marketplace that they are making a tremendous commitment,'' Kliegerman said.
Gary Barnett, president of Extell Development Corp., a New York developer with about a dozen residential projects under way in Manhattan, said New York is the strongest U.S. residential market by far.
``New York is the most international and cosmopolitan city. It is the financial capital of the world,'' Barnett said in an interview. ``There is a tremendous desire for quality in the right location.''
Extell also develops property in Boston, Miami and Chicago.
Fueled by Wall Street bonus money, Manhattan apartment prices gained 73 percent over the past five years. Average co-operative apartment prices fell 16 percent in the third quarter to $1.09 million from a record $1.3 million a quarter earlier, according to Miller Samuel.
The average price of a condominium rose 3.3 percent to $1.5 million. The average price of a luxury unit, defined as the top 10 percent of all transactions, fell to $4.5 million from $5 million in the prior quarter.
Toll Brothers built 2,157 homes sold at an average price of $690,000 in its third quarter, the three months ended Aug. 31. Its shares have fallen 11 percent this year compared with a 24 percent drop in the Standard & Poor's Supercomposite index of 16 homebuilders. Toll shares today rose 92 cents, or 3 percent, to $30.79 in New York Stock Exchange composite trading.
``I can't say that the worst is behind us and I can't say that it isn't,'' Toll said. ``I only know that those who don't buy now are going to kick themselves.''
The developer builds houses in 20 states, including Arizona, California, Florida, Illinois, New Jersey and Connecticut.
Thursday, October 12, 2006