Note to Developers: BUILD SMALLER!

Posted by Toes

Mon Jan 29th, 2007 01:46 PM

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Developers - I beg you, BUILD IT (SMALLER) AND THEY WILL COME!

I have several clients who are 20-something year old Wall Streeters getting their first sizeable bonuses. They all want to buy new construction condos or condo conversions under $700K south of 34th Street. THERE IS ALMOST NOTHING FOR THEM. With the exception of the Financial District, developers are not building smaller units. When they do build smaller units, they sell out right away, and usually they are at a higher price per square foot than larger units. So it just doesn't make sense - why aren't developers building smaller units?

Young people like luxury. They like new. They have heard enough horror stories about co-op boards and do not want to deal with all of the strings. They don't have 20 - 25% down with money in reserve at age 25, BUT they can afford 10% down and with their high incomes and bonuses, they can afford the higher payments. Most young people in finance want the option to sublet. They read Rich Dad, Poor Dad. They hate throwing money away on rent. They know the real estate market in NYC appreciates. They want to buy but there is almost nothing for them to choose from.

Case in point. Jade Condominium sold out of their studios almost immediately and the building was mostly studios. The Charleston sold out of their $500K - $650K apartments in a heartbeat and they are releasing a new line of studios - the least expensive is $650K. One Avenue B opened in early November and they have one studio left. The A Building just opened their sales office and they have one studio for $650K, everything else starts at $715K. Basically, the ONLY place young Wall Streeters can spend their first bonus is 184 Thompson. Their studios are selling briskly, and although prices started in the low $400Ks, their least expensive studio is now $480K.

Basically, if you want to live below 34th Street, the Financial District is your only solace. The developers of 88 Greenwich, the Cocoa Exchange, and 20 West Street actually built smaller units. Unfortunately, many young people still associate the Financial District as being "dead" after 7pm. Although this might be the case, the neighborhood is changing! Wait about two years and I think the studio buyers will wish they had gotten in early. With all the luxury studio rentals and studio condos going up, the redesign of the Fulton Street subway terminal, the Freedom Tower, Tiffany's and Hermes, and much much more, it will not be long before the bars and clubs start start staying open later at night!

So developers... Please think about the studio buyer when designing your next building! And call me first. I've got buyers for you.

Also check out this article about smaller units from the Real Deal.