Stephen G. Kliegerman
President of Development Marketing
DURING the real estate boom, it seemed that every day brought news of a new condominium project in New York. Big or small, classic or modern, luxurious or merely comfortable — there would be something to satisfy both buyers’ needs and buyers’ wallets.
But as the fall season begins, this year’s crop of condos is sparse. The new and newly converted buildings that are starting sales have had to hurdle the global economic collapse and the credit crisis. Many projects have not survived, and the number of units introduced this year will be a fraction of the total of the boom years.
According to data compiled by the Corcoran Sunshine Marketing Group, 1,111 new units have opened or are projected to open this year in Manhattan south of Harlem, down from 1,767 a year ago and 8,552 in 2007.
For developers whose buildings are about to hit the market, the scarcity of new condos is good news, signaling a lack of competition and, perhaps, higher prices and an end to concessions. For people hoping to buy new apartments, the market is worrisome for the exact same reasons.
“It’s not just about rising prices,” said Kelly Kennedy Mack, the president of Corcoran Sunshine, which markets new and converted condominiums. “It’s also about not having the same kind of choices. Those buyers who are looking for something very unique are going to have a very difficult time finding it.”
Jonathan Miller, the president of the appraisal firm Miller Samuel, agreed that inventory is lower. But in Manhattan, especially downtown, he said, there is ample “shadow inventory” — new apartments that are being rented out or held off the market.
In Brooklyn, Mr. Miller said, lower prices have made development financing easier to get, which has led to a steady rise in market share for new condos. In the second quarter of 2010, he said, 14 percent of closed sales in the borough were on newly developed units. By the second quarter of this year, he said, that number had risen to 24.6 percent.
Most of the buildings entering the market this fall are on the small side. Of the 20 that have opened or are projected to open this year in Corcoran Sunshine’s Manhattan coverage area, only 3 have more than 100 units. Brokers marketing the small buildings say they have much to offer in the uncrowded market, including views, historic details and all-around plushness.
But several high-rise, high-profile buildings will soon angle for buyers, including one project that promises to change the city’s skyline: One57, a 90-story mixed-use tower at 157 West 57th Street.
The building, which Extell, the developer, says will be the tallest residential property in Manhattan, is to have 135 condo units, ranging from two- to five-bedrooms, from the 32nd floor up.
Detailed pricing information has not been released, but Gary Barnett, the president of Extell, said units would cost $3,000 to $7,000 per square foot — or $3 million and up — when sales start in November. One57’s Web site, which invites potential buyers to “register your interest,” gives a price range beginning at $5 million and topping out at $30 million-plus.
Mr. Barnett said in an interview that, with construction financing for large projects still difficult to obtain, he believes his building is years ahead of anything comparable entering the market.
“Really nothing is even close to sales, let alone for delivery,” he said. “So to some extent, we have the market to ourselves for the next two to three years. The only caveat is, we can’t have the world melt down. If the world melts down, all bets are off.”
He added that he did not believe that would happen.
Shaun Osher, the chief executive at the brokerage and marketing firm CORE, said several factors had hindered large projects, including the disappearance of large lenders like Lehman Brothers, the reluctance of landholders to sell buildable lots in a weakened market, and a distaste among developers for risk. Large and well-capitalized developers, though, have had more leeway. Extell is one, and Related Properties, which will soon start selling condo units at its new building at 460 West 42nd Street, is another.
That project, known as 1 MiMa Tower and designed by Arquitectonica, has 151 condo units along with a 50-story rental component that opened in the spring. They range from studios to three-bedroom units. Joanna Rose, a Related spokeswoman, said prices had not been set.
Toll Brothers, one of the country’s largest residential developers, has two condo buildings opening in the coming months: the Touraine, a 22-unit structure at 132 East 65th Street with prices from $1 million to $15 million, and 205 Water Street, in the Dumbo section of Brooklyn.
The latter, in a cobblestoned part of the neighborhood dominated by converted factories and warehouses, has 65 units. Prices will be around $850 per square foot, according to David Von Spreckelsen, the president of the Toll Brothers City Living division.
The building, designed by GreenbergFarrow, is seeking LEED Gold certification for environmental sustainability, and has apartments ranging from 550-square-foot studios to a 2,300-square-foot penthouse, Mr. Von Spreckelsen said. The list of potential buyers, he added, is more than 1,100 names long.
Brooklyn — both emerging and established neighborhoods — is the site of much of the season’s new condo development. The reasons, said Mr. Osher of CORE, are economic.
“I think it’s been easier in this market to put deals together that are smaller in size because of financing,” he said. And Brooklyn, he added, has a lot of sites that can be developed for the available money.
One of the borough’s most eye-catching buildings is on a lot where ground was broken years ago. A 14-story, 186-foot tower at 144 North Eighth Street, jutting over an otherwise low-rise section of Williamsburg, it has been under construction since 2005. Because construction started just before a neighborhood zoning change, the building’s status as the tallest object for blocks may well remain unchallenged.
Residents’ opposition, ownership disputes and the bad economy stalled the project until GFI Development bought it in 2008. The company, and the project’s architect, Robert M. Scarano Jr., reduced the planned height by two stories and finished construction. The result is a 41-unit building with on-site parking and a sprawling green roof on the second floor, with areas for flowers and a vegetable garden.
There are views of the Empire State Building, nearby Bedford Avenue and most everything else in between. Sales started this month; units available so far range from a one-bedroom one-bath condo on the fourth floor, for $575,000, to a three-bedroom two-and-a-half-bath unit on the 10th floor for $1.925 million.
Several neighborhoods away, in eastern Brooklyn Heights at 75 Clinton Street, is a rare new condo development for the area. The W Development Company is converting a prewar commercial building there into 74 condominiums.
The building, with a 5,000-square-foot roof deck and the amenities usual to a new building, among them a gym, officially started sales this month. Apartments range in size from studios to three-bedrooms, and in price from $479,000 to $2.05 million.
In Clinton Hill, NLH Developers is opening Lineage II, designed to evoke vintage brownstones and town houses, at 136-146 Clifton Place. The 48-unit first phase, which went on sale a year ago, is almost sold out, said Jackie Buddie, a spokeswoman for the Corcoran Group, which is marketing the project. The second phase, designed by Karl Fischer, has 32 units meant to look, from the outside, like four connected houses. Units there range from 777 to 1,392 square feet, and are priced from $389,000 to $599,000.
Large projects like MiMA and One57 aside, Manhattan condo-hunters will have mostly small and midsize buildings to consider, though smaller does not necessarily mean cheaper. There is 55 Warren Street, in TriBeCa, a converted five-story building with an Italianate limestone facade and just four floor-through apartments. Amenities include a stone-walled wine cellar. Only one condo is listed so far — a 3,627-square-foot four-bedroom, for $6.75 million — but the others are expected to cost as much as $16.5 million
In Greenwich Village, the season’s major new development is 130 West 12th Street, a converted prewar building that was once part of the St. Vincent’s Hospital campus, housing both offices and residences. Rudin Management, the developer, bought the building in 2007 and, after St. Vincent’s moved out the following year, gutted it, reducing the number of units to 43 from 100.
The building, where sales are expected to start sometime this fall, will have a rooftop terrace and garden, and units ranging from one-bedrooms of 869 square feet to four-bedrooms of 2,837 square feet. There will also be three duplex penthouses, starting at 3,202 square feet. Prices start around $1.395 million.
William C. Rudin, the company’s chief executive, said prices would reflect the market.
“There’s very strong demand for quality, elegantly designed, well-located projects,” he said.
Stephen G. Kliegerman, the president of Halstead Property Development Marketing, says the scarcity of new condos in the city has several consequences. One is that rents are edging up as fewer people are choosing to buy. Another is that developers and lenders, seeing the opportunity to fill a void, are beginning to make deals on large new developments. Several around the city are planned for 90 to 150 units — though those projects will not be completed for years.
For now, he said, “I think you’ll continue to see inventories reduce, and as that happens you’ll see prices slightly increase.”
A good indication of the market’s health, Mr. Kliegerman said, will be sales at projects in less established neighborhoods, including those that started over the summer, or earlier.
New condos in prime neighborhoods, like 15 Union Square West or the Laureate, at 2150 Broadway on the Upper West Side, have already done well, he said, whereas buildings like his own company’s 109 Gold Street, in Vinegar Hill, Brooklyn, or 58 Metropolitan Avenue, in Williamsburg, could be bellwethers for buildings off the beaten path. Either way, Mr. Kliegerman said, buyers going condo-hunting should not expect bargains.
“Developers are starting to say no to negotiations,” he said, adding that at his company’s recently opened Kirkman Lofts, in Dumbo, Halstead had not been listening to lower offers.
“Whether it’s the buyer, their friend, or the buyer’s attorney,” Mr. Kliegerman said, “they’re all surprised that the developers are able to say no. But what they’re realizing is, the developers can say no, because there’s such a lack of product out there.”
Thursday, September 22, 2011