Stephen G. Kliegerman
President of Development Marketing
With homebuyers becoming increasingly scarce, desperate sellers aim to tap the interest of real estate investors with bundled apartment units and reduced prices.
By Amanda Fung
With buyers of individual condominiums in short supply, developers are bundling up unsold units in a half dozen new residential buildings in Manhattan and Queens and hawking them to investors in bulk at substantial discounts.
Halstead Property Development Marketing has been quietly marketing these packages for a few weeks. This week, the firm turned up the heat and began advertising the deals, according to Stephen Kliegerman, executive director at Halstead.
Typically such bulk deals are offered before construction actually begins as a way to jump start sales. In the latest wrinkle on the practice, developers staring into a deteriorating real estate market are seeking such sales in buildings that are more than 50% sold as a way to cash out of projects.
“More developers will sign on to do this,” Mr. Kliegerman said. “Most of these developers want to cut their losses, stop spending on marketing and carrying charges on the property. They want to move on and focus on something more profitable.”
The condo packages at the six buildings are being offered at prices ranging from $2.8 million to $15 million. Many of the units are being offered at sizeable discounts. At The Bridges North NY in Harlem, an 18-unit package compromised of five three-bedroom apartments and 13 two-bedroom apartments, as well as over 100,000 square feet of retail space, is being offered for $15 million. At The 505 in Hell’s Kitchen, where 23% of the building’s units are sold, according to StreetEasy.com, four one-bedroom units are being offered for $2.8 million.
In Harlem, The Savoy West, Kalahari, and The Lore are also offering bundled packages. Toll Brothers’ 5th Street Lofts in Long Island City, Queens, which is about 90% sold, is offering its remaining units in a bundle.
“There was no need for block sales in the past,” said Jorden Tepper, executive director of sales at Century 21 NY Metro, who has suggested bundled packages to some distressed developers, but has met with stiff resistance. “They are still reluctant, because it is hard to digest the reality of selling at prices that will not meet their (expected) margins,” he said.
Mr. Tepper is currently representing potential overseas investors who are looking to buy block of properties. However, they are looking for specific prices.
“From my viewpoint, there is still a big disconnect from where an investor will buy these packages and how much a seller would sell them for,” said Andrew Gerringer, managing director in charge of marketing new developments for Prudential Douglas Elliman.
Mr. Kliegerman said there has been a number of inquiries and offers from local investors, buyers from Southwest Texas, California, Florida as well as Italy. But deals have not been finalized, yet.
Wednesday, April 15, 2009