Are developers playing "chicken" with the market?

[David Goldsmith]

Yair Levy Family’s Tin Pan Alley Buildings Risk Foreclosure

Banned NYC developer Yair Levy and family could lose their Tin Pan Alley properties, which are in pre-foreclosure.

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Yair Levy family’s Tin Pan Alley buildings in pre-foreclosure​

Default risk for developer banned from selling NY condos and co-ops

Developer Yair Levy was once a significant player in New York real estate. Then the state banned him from selling condos and co-ops. He kept his family-owned properties, though — along with the obligation to pay their loans.
But apparently, his family is struggling to do that. Wells Fargo has begun foreclosure proceedings at the Levy family’s half dozen West 28th Street buildings. PincusCo first reported the move.

The action stems from a $21.3 million loan issued in 2018. Wells Fargo identified Yair Levy’s daughters, Galit and Rafaela Levy, as guarantors in its complaint.

Levy’s New York ban is limited to selling apartments. He still heads the family business, Time Century Holdings, according to his website, which includes photos of seven “past and current assets.”

In 2011, a court found that Levy defrauded buyers and tenants at Rector Square, a failed Battery Park City condo conversion, by emptying its reserve fund. Levy was ordered to pay $7.4 million in damages or restitution, as well as other civil penalties. The judgment, which included the statewide ban on selling apartments, was upheld the following year.
In 2013, The Real Deal reported that Levy was assumed to be the buyer of the six properties  —  45 West 28th Street, 47 West 28th Street, 49 West 28th Street, 51 West 28th Street, 53 West 28th Street and 55 West 28th Street  —  for $44 million.

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Preservationists had tried before to get the buildings landmarked and continued that effort after Levy bought them. In 2019, they succeeded. Against his wishes, the city gave landmark status to five of the properties, excluding only 45 West 28th Street.
The Landmarks Preservation Commission cited the history of songwriting on what was known as Tin Pan Alley. Levy had claimed some of those songs were racist, making the buildings unsuitable for landmark designation.

The developer became more active in Florida after running into trouble in New York, but the episode continued to bother him.
“Money, for me, is not everything. What bothers me is that they use my name and lie about me stealing money when it’s not true,” Levy told TRD in a 2014 interview. “They refused to look into documents I prepared to prove everything I was saying.”
He called the ban an embarrassment and said nothing could stop him from doing business.
Levy could not immediately be reached for comment. Time Century Holdings could not be reached.

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[David Goldsmith]

Ranking New York City’s Top Residential Developers

The Chetrit Group and Extell top the list of New York City developers ranked by number of residential units under construction.

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These developers build the most homes in NYC
Cherit, Extell top list, but ranking reveals some surprises

UPDATED: August 28 at 2:50 p.m.:
New York City has everything. Everything except enough housing.

But some builders are doing something about that.
Nearly 40,000 units of multifamily housing are under construction in the city’s three most populous boroughs — Manhattan, Brooklyn and Queens — and nearly 20 percent of them are being built by just five developers.

The upper echelons of the list of the city’s top residential developers closely resembles The Real Deal’s recent ranking of developers across all sectors, based on square footage of both residential and commercial projects.
The eponymous firm of Moroccan émigré Joseph Chetrit tops the resi ranking, based on the same three projects — encompassing 2,156 units — that put him at the top of the overall ranking. Likewise, Gary Barnett’s Extell Development was the second-ranked developer overall and No. 2 spot on the resi list with 1,776 units. And Matt Schwartz’s Domain Companies also reprised its role in the No. 3 spot based on the 1,114 units across the same three projects that gave it the bronze in the square-footage ranking.
But after that, the resi-only ranking diverges from the cross-sector league table. While Teconic Partners and Boston Properties rounded out the top five of the overall ranking based on their commercial projects, it was Heartfelt Builders that ranked No. 4 in the resi ranking with 1,045 units underway, and Lendlease ranking fifth with 834 units.
To rank the city’s top residential developers, The Real Deal analyzed all new building filings submitted to the Department of Buildings between May 1, 2022, and May 1, 2023 for projects in Manhattan, Brooklyn and Queens with at least five proposed residential units.

Units under construction are not evenly distributed across the city. Brooklyn has over 45 percent of them, spread across many smaller projects. In that borough, the list of top resi developers looks quite different.

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Lendlease, which ranks No. 6 citywide, is the top resi developer in Kings County, with 834 units under construction in two projects. The Domain Companies’ two Brooklyn projects, with 615 total units, ranks it No. 2, and Apollo Global Management, which is developing a tower at 589 Fulton Street with the Witkoff Group, ranks third in the borough with 592 units on tap.
In Queens, Heartfelt Builders is the No. 1 resi developer with 1,045 across two projects. BLDG Management comes in second with an 825-unit project, and Vornado — which doesn’t even make the top 10 in the citywide resi developer ranking — ranks third based on the 568 units it’s building next to its Rego Center mall.

 

[David Goldsmith]

Unit at Jiashu Xu’s Skyline Tower Sets Queens Price Record

A penthouse purchased in a bulk sale at 3 Court Square in 2022 sold for $2.3 million, or $2,300 per square foot.

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Penthouse at Skyline Tower sets price record in Queens​

Two-bedroom at Jiashu Xu’s condo fetches $2.3K psf for bulk purchaser Risland

Queens’ tallest building is reaching unprecedented heights for pricing, too.
A penthouse at Chris Jiashu Xu’s Skyline Tower set a Queens price per square foot record when it closed last week for $2.3 million, or $2,300 per square foot, according to Modern Spaces, which heads sales at the building.

The seller of PH302 is Risland Holdings, which had acquired the penthouse as part of a $161 million bulk purchase of Skyline apartments from Xu’s firm a year ago. Risland is an equity investor in the condominium.
The 66th-floor apartment at 3 Court Square topped the mark of $2,200 per square foot set by a larger penthouse in the tower. That unit sold earlier this year for $2.9 million.

Modern Spaces CEO Eric Benaim declined to share the identity of the buyer, though he confirmed it was an all-cash deal.
The two-bedroom apartment features views of the Manhattan skyline, white oak flooring and a walk-in closet in the primary bedroom. Amenities at the 67-story building include a fitness center, pool, children’s playroom and pet spa.
Nine months after Risland’s bulk purchase, the Hong Kong-based investment company used the units to secure a $60 million loan from Emerald Creek Capital.
Four years after sales launched at Skyline Tower, Queens’ first billion-dollar project, 587 of its 802 units have sold and another 13 are in contract, according to the sales team.

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Xu’s United Construction and Development aimed for a $1.1 billion sellout at Skyline Tower, making it the priciest condo ever in Queens. The building has attracted a slew of international and all-cash buyers, but selling out the ambitious project has been a challenge.

Deals flourished at the building after Amazon announced in 2018 that it would build a Long Island City office campus, but the company ditched its plans in February 2019.
The pandemic hit a year later, slowing contract signings again, but Benaim said sales have picked back up over the past few months, propelled by the market’s inventory shortage and rising rents.
“Early in the year, people weren’t sure what was happening,” Benaim said, noting that buyers have since adjusted to inflation and higher mortgage rates. “People are just like, ‘This is it. This is going to be the new normal for the next year or two.’”
Benaim also attributed the uptick in sales to new retail options in the area, including Target and Trader Joe’s. “The surrounding area of Skyline has changed dramatically,” Benaim said.
Sales of the tower’s penthouse collection launched in 2021 with Nest Seekers Development Marketing at the helm. Modern Spaces, which has handled the bulk of Skyline Tower’s listings since 2019, has since taken over all sales.

Last year, a group of 90 buyers — just shy of 20 percent of unit owners at the time — filed a complaint with the state attorney general about the tower’s marketing, management and construction, including flooding and a lack of amenities.

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[David Goldsmith]

Some 479 of the building’s 566 units remain unsold

Harry Macklowe Gets Inventory Loan at 1 Wall Street

Developer Macklowe snagged an inventory loan for 1 Wall Street, its office-to-residential conversion in the Financial District.

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Macklowe lands $300M inventory loan at 1 Wall Street​

Developer hunkers down on pricing amid slowed sales market

Harry Macklowe landed a $300 million inventory loan for the many unsold apartments at his office-to-residential conversion at 1 Wall Street in the Financial District.
The project, long-delayed and slow-selling, will test investor patience as Macklowe hunkers down on the pricing of its larger units and tries to wait out the current down market.

The famously mercurial developer has turned down numerous would-be buyers in the building who recently made all-cash offers, according to people familiar with the project.
“Beginning in about 2017, condo projects have struggled to make money,” said Urban Standard Capital founder Seith Weissman. “The best ones are breaking even.”

The new inventory loan brings the total cost of 1 Wall Street to around $2.6 billion, adding to the possibility of massive losses at the project, with Macklowe’s ambition to sell an office-to-residential conversion at top dollar unrealized and costs outstripping sales by possibly hundreds of millions of dollars.
Although that isn’t necessarily the fault of the developer or equity investor, said Weissman, “it is their problem.”
Some 479 of the building’s 566 units remain unsold, according to loan documents. Compass is expected to leave the project soon, although the brokerage did not specify a date for its exit.

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The new cash infusion, which is secured by unsold units in the building, came from the private wealth division of Deutsche Bank. Macklowe’s equity partner on the project is former Qatari prime minister and billionaire Sheikh Hamad Bin Jassim Bin Jaber al-Thani.

The vast majority of buyers at 1 Wall Street have snapped up either studio or one-bedroom apartments for about $1,900 per square foot, in line with the neighborhood’s median sale price, according to data firm Marketproof. But Macklowe is aiming much higher for larger units.

“One challenge at 1 Wall Street was the depth of the units,” said Laura Tomana, who worked for years on the project at Core Real Estate, which Macklowe replaced with Compass in 2020. Tomana is now vice president of research at Brown Harris Stevens Development Marketing.

When condo units become larger due to deeper cores in office buildings, developers can encounter pricing problems. Selling converted space for the same price, or higher, as new ground-up projects is a challenge, while selling below market rate can mar the image of a project.

“The Financial District is one of the most accessible neighborhoods to enter due to its inventory,” Tomana said, which runs counter to Macklowe’s apparent desire to keep prices high. Among new inventory that will compete at a higher price point: 275 condo units are coming to 125 Greenwich Street.
Average asking prices for two-bedroom apartments at 1 Wall Street come to $2,500 per square foot, and grow to at least $3,000 per square foot from there. At its current pace of sales, more than a decade would pass before the building sells out, evidencing the need for an inventory loan.
New development sales have slowed across the board.
The number of new development contracts signed in Manhattan last quarter fell 30 percent from the same period last year, according to Brown Harris Stevens Development Marketing. The average unit price this year in the Financial District is $1.7 million — its lowest level since 2015.

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[David Goldsmith]

NYC New Condo Sales Dip Below Pre-Pandemic Levels

September was gut check time for developers like Extell, Related, Tishman Speyer and others who are offering new condominium apartments.

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New condo sales dip below pre-pandemic levels​

September was gut check time for developers offering new product

In New York’s new development market, there’s a chill in the air.
Contracts signed for new condominium apartments fell in September to below pre-Covid levels in Manhattan, Brooklyn and Queens, according to data from Marketproof.

It was the first month since January that such deals fell below their average from 2015 to 2019.
The slump ends a relatively good run for new condo contracts which, powered by all-cash buyers and developers motivated to sell, has been a bright spot in the city’s home sales market.

“September results were mixed,” said Marketproof’s Kael Goodman. “High mortgage rates have had an impact but there is still so much cash out there.” About 68 percent of new development sales were completed without mortgage financing, according to Goodman.
Only the luxury submarket, consisting of new units priced at $4 million and above, outperformed its pre-pandemic average. Even so, it was the worst month in at least a year for such deals, with just 26 contracts signed.
And yet, the stratospherically wealthy signed or closed a handful of deals north of $29 million at Extell’s Central Park Tower, the Giorgio Armani Residences and Naftali’s 200 East 83rd Street.
Back on terra firma, Related’s Tribeca Green, a rental-turned-cooperative in Battery Park City, and Extell’s One Manhattan Square, an 815-unit offering in Two Bridges, were the top selling projects. Related reported 11 signed contracts and Extell reported seven at the Lower Manhattan buildings.
The median price of a new condo in the central borough rose from August to $2.36 million. The median price per square foot grew to $2,049.

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September closed a weaker quarter overall for new development, with 40 percent fewer contract signings from the prior quarter, and 30 percent fewer than the third quarter of last year, according to a Brown Harris Stevens Development Marketing report.
Company president Stephen Kliegerman blamed “increasingly low supply, very few buildings launching, and buyers still adjusting to the new mortgage rate landscape.” Rates hit a 23-year high last week.
In Brooklyn, the median asking price was stable at $1.08 million, and the median price per square foot was $1,282, largely unchanged from August. Top sellers in the borough included Extell’s Brooklyn Point and Tishman Speyer’s 11 Hoyt Street, which each recorded three contracts. Both projects are in Downtown Brooklyn.
The new development market in Brooklyn and Queens has recently gained momentum thanks to lower prices and higher inventory in the outer boroughs. In Manhattan, just 5,000 unsold new condos remain, enough inventory for 47 months’ of sales at the current pace, according to Marketproof. Overall, there are fewer than 11,000 unsold condos in New York City.

Fortis inked a deal for the priciest unit, an apartment at the Olympia Dumbo building asking $2,389 per square foot.
In Queens, the median price per square foot held stable at $1,350. Top sellers included BK Development’s 50-07 5th Street, with six contracts, and SB Development’s Nova building at 29-28 41st Avenue, with five. Both are in Long Island City.
Chris Xu’s Skyline Tower had the priciest unit in Queens go into contract, at $1,900 per square foot.

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[David Goldsmith]

New York City Housing Production Collapses

The construction of residential housing in New York City dropped under fewer tax breaks and higher interest rates.

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New York on track for its worst year of housing production since 2012​

Implosion of activity pins builders’ hopes on infrastructure
Fewer tax breaks and higher interest rates have throttled the construction of residential housing in New York City.
A report from the New York Building Congress forecasts that home production will fall 62 percent from last year’s level to 11,300 new units, making it the worst year for new housing construction since 2012, and ending a seven-year streak of more than 20,000 new homes created annually.

“Residential is troublesome,” said Carlo Scissura, the president and CEO of the Building Congress. “Government spending [on infrastructure] is now going to lead the way.”
The trade group hosted the borough presidents of Manhattan, Brooklyn and the Bronx on Wednesday to discuss the future of building, with a focus on infrastructure.

“I want to tear down FDR Drive south of Brooklyn Bridge,” said Manhattan borough president Mark Levine, who has also identified more than 170 potential residential construction sites.
“Many of our neighborhoods have not done their fair share when it comes to affordable housing,” Bronx president Vanessa Gibson said. “We are not accepting that Nimby approach when it comes to our neighborhood.”
Construction spending, of which real estate represents 74 percent, will rise this year by an inflation-adjusted $13 billion, reaching a total of $83 billion, according to the report. Price inflation for materials and labor is “not likely to deflate,” but slowed from its 2022 pace.
Brooklyn president Antonio Reynoso identified fortifying waterways as a top priority, following recent flooding. “It’s not about tearing down the Brooklyn-Queens Expressway,” he said, “even though that’s a long-term goal.”

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Spending on commercial real estate is expected to grow 32 percent above pre-pandemic levels by 2025, although the outlook for new office construction has fallen precipitously.

While more than six million square feet will be built in three office towers in 2023, about one million square feet of new office can be expected in the years ahead.
Major commercial projects include TF Cornerstone and RXR Realty’s 2.1 million-square-foot project at 175 Park Avenue and the second phase of construction at Hudson Yards.

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Construction employment remains 5 percent below pre-pandemic levels and won’t reach above that high water mark until 2025, when the Building Congress expects 162,000 construction jobs.
“Over the next few years, government spending on infrastructure development is projected to dominate the construction market,” according to the report. But only $11.7 billion of the $1.2 trillion Bipartisan Infrastructure Law outlay has gone to New York.

Neither the city nor the state keeps a publicly accessible record of BIL funding. “Introducing a centralized system for monitoring the allocation and utilization of BIL funds by both entities,” the report concludes, “would improve transparency and refine project delivery processes.”

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[David Goldsmith]

Extell Takes Haircut on Midtown Development Site

New York real estate developer bought the property for $268 million in 2017 and recently agreed to sell it for $173 million

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Extell unloads Midtown development site at apparent loss
Gary Barnett’s firm appears to take sizable haircut at 1710 Broadway

Gary Barnett is letting go of a development site in Midtown.
His Extell Development has agreed to sell 1710 Broadway, at the southeast corner of West 54th Street, for $173 million, records show. In 2017, Extell paid $268 million for it.

Riu Hotels and Resorts bought the site, PincusCo reported. A Riu spokesperson confirmed the sale.
Extell is working to get plans approved for a 54-story, 673-unit hotel to replace the six-story, 52,000-square-foot office building at the address, but the Department of Buildings has yet to sign off.

Bad Boy Entertainment leased the entire building in 2004. Barnett’s assemblage includes 360,000 square feet of air rights obtained in 2016.
Extell owned about 82 percent of the property, and the transaction is expected to create $54 million in cash, according to regulatory filings with the Tel Aviv Stock Exchange, where Extell’s bonds trade. The price of the site works out to around $590 per buildable square foot.
Barnett’s firm had bought into the project in 2015, taking a 39 percent ownership stake, using proceeds from the sale of its Ring Portfolio. The developer, in partnership with C&K Properties, hoped to bring a 60-story, hotel-condominium building to the site. The year after the 2016 air rights deal, Extell acquired the deed for $268 million. It sought to sell the site in 2018, then refinanced it the following year with a $124 million loan.
That loan, from Israel’s JVP Partners at a rate of 4.5 percent over LIBOR, may have come due and helped motivate the building’s sale. The LIBOR interest rate, which underpins many financial contracts, has risen to nearly 6 percent from below 1 percent in 2021.
The sale to Riu may help Extell build a financial cushion while debt costs remain elevated and the Federal Reserve signals that it might keep interest rates up for a while yet. Prior to the sale, Extell told bondholders it valued the Midtown site at $193 million, or $20 million more than the eventual price.

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Yields on Extell’s bonds have risen more than 10 percent this year, according to the TASE — a sign of increased risk perceived by investors.
Extell remains active in Midtown. It recently enlarged an apparent hotel project at 201 West 54th Street, at the northwest corner of Seventh Avenue, by adding 100 more rooms, and wants to reopen the former Wellington Hotel with 208 rooms.
The hotel at 1710 Broadway would be Riu’s third in Midtown and largest in New York.
In 2022, the Spanish brand opened its Plaza Manhattan Times Square hotel, a 47-story tower with 656 rooms at 145 West 47th Street. The company said at the time that it was seeking to expand by buying more urban locations. In 2016 it opened its first New York hotel, the 650-room Plaza New York Times Square, at 305 West 46th Street.

Hotel revenue has rebounded in New York City following the pandemic. An average night at a city hotel rose to $264 during the first seven months of the year, according to hospitality data firm STR, an increase of about 8 percent from a year ago.
That recovery has helped spur plans to add hotel rooms in the city, and a recent regulatory crackdown on competing short-term rentals will likely boost demand. At the start of the year, New York was scheduled to add more than 10,000 rooms — or about 8.5 percent of inventory.
Extell did not respond to a request for comment.

 

[David Goldsmith]

Brodsky To Convert Flatiron Building to Condos

The Brodsky Organization has bought a stake in the Flatiron Building and will convert the iconic property into high-end condos

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Brodsky to convert Flatiron Building to condos​

Plans end wild auction saga over landmark building’s future

The Flatiron Building is going residential.
The Brodsky Organization has bought a stake in the storied landmark and is teaming up with the owners to convert it into apartments, the partners announced Thursday.


Brodsky, one of New York’s dynastic real estate families, will oversee the conversion of the 120-year-old building — most likely into condos rather than rentals — with the Sorgente Group. It’s the latest turn in a saga that has enveloped one of the city’s icons.
The property went up for auction in the spring after its owners — which included Jeff Gural’s GFP Real Estate, the Sorgente Group, ABS Partners and investor Nathan Silverstein — couldn’t agree what to do with the vacant office building.
The auction turned into a circus when then-unknown investor named Jacob Garlick came out of nowhere to produce the winning bid at $190 million, only to fail to put down the required deposit. That resulted in a new auction, which Gural’s group won with a bid of $161 million.
The owners then sought a new investor to come in and finance the conversion. A Newmark team of Adam Spies, Doug Harmon and Adam Doneger marketed the property for sale and brokered the deal with Brodsky.

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Gural, speaking at the conclusion of the May auction, said he expected it to cost $100 million to convert the property into residential condos.

“I think I got to talk to my partners and come up with a plan. I would think either make half the building residential and half office or all residential,” he said at the time. “We got to figure it out.”
The exact plans for the building, which will require approval from the Landmarks Preservation Commission, are not entirely clear. Marketing materials for the property show that it could be converted entirely to residential, or half residential with the other half remaining either office or going to hotel use.
Brodsky, meanwhile, has been busy developing other residential properties.
The company recently teamed up with Avery Hall Investments to develop a 350-unit building in Gowanus. Brodsky is also developing a pair of rental buildings at the Pacific Park megaproject.
The firm traces its roots to 1947, when Nathan Brodsky began rehabilitating brownstones and apartment buildings in Greenwich Village. That work was carried on by a second generation (Daniel Brodsky) and a third (Dean Amro, Alexander Brodsky and Thomas Brodsky).

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[David Goldsmith]

Central Park Units Top Manhattan Market

Extell’s Lincoln Center condo at 50 West 66th Street led Manhattan’s luxury contracts, according to Olshan Realty

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Extell’s Lincoln Center condo takes another turn atop Manhattan luxury​

Developer’s 50 West 66th Street topped contracts, tailed by Barbara Walters’ co-op
Manhattan’s luxury contracts bounced back last week, with some familiar names at the top.
A unit at Extell Development’s 50 West 66th Street was the priciest contract signed last week, according to data from Olshan Realty on homes in the borough asking $4 million or more. It was the property’s fourth time atop the report this year.

Unit 43N had an asking price just under $23.3 million. The 3,400-square-foot condo has four bedrooms and four and a half bathrooms. The living room has a loggia overlooking Central Park.
Amenities in the building include doormen, a fitness center, basketball and pickleball courts, indoor and outdoor pools and a game room.

In second place was the former home of legendary late news anchor Barbara Walters.
The sixth-floor unit at 944 Fifth Avenue went into contract with an asking price just under $17.8 million. The co-op initially listed in April for just under $19.8 million. The broadcaster known for years of appearances on Today, ABC Evening News and The View, died in December.

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The listing agent was Compass’ Alexa Lambert.
The home has five bedrooms, five and a half bathrooms and 10-foot ceilings. The living room and primary bedroom each have a fireplace, and face Central Park, along with the living room. The co-op board allows 33 percent financing, and amenities in the building include a doorman and a gym.

Of the 24 units to enter contract last week, 13 were condos, seven were co-ops and one was a townhouse.
The homes’ combined asking price was $173.9 million, which works out to an average of $7.2 million and a median of $5.9 million. The typical home spent 803 days on the market and received a 6 percent discount.

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[David Goldsmith]

Brokers Talk Headline Pricing

Manhattanites are no strangers to extravagant home prices, but every now and then, a sticker shock-inducing listing will hit the market, prompting a wave of press coverage on the property.

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Brokers talk “headline pricing”​

How developers, brokers price units to drum up buzz

NOV 8, 2023, 7:00 AM
In a city where eight-figure deals are commonplace, most Manhattanites don’t bat an eye at the price tag on an ultra-luxury pad.
But every now and then, a listing will hit the market with a price so high that it prompts a deluge of press coverage, social media posts and industry gossip — including about whether the dollar figure is realistic or hype.

“They seem to be in a contest,” Compass’ Vickey Barron said. “Whether it’s worth that price or not, they just want to come out with that headline.”

Take Gary Barnett’s penthouse at Central Park Tower: an 18,000-square-foot triplex marketed by Ryan Serhant as the highest residence in the world. The unit went up for sale last year priced at $250 million, earning it a front-page spread in the Wall Street Journal and multiple spots on Serhant’s YouTube page.
The Extell founder’s crown jewel recently made the media rounds again when he slashed the price to $195 million. Barnett copped to the initially inflated ask, calling it a “headline price” that he revised in an attempt to “get serious” about locking down a buyer.

“I don’t have to use the tactic of overpricing something to get attention.”
JOHN GOMES, DOUGLAS ELLIMAN

The tactic, often referred to as aspirational pricing, is common among developers, though some media-savvy brokers have also leaned on the strategy to boost resale listings — and their brands.
Aspirational pricing isn’t new to Manhattan. But the astronomical price tags like the Central Park Tower penthouse’s have become more pervasive with the rise of Billionaires’ Row and other ultra-luxury enclaves.

Though these listings are sure to raise some eyebrows, the buzz generated when they hit the market — and again when their prices are reduced — could help attract a buyer. But the strategy doesn’t always pan out.
One notable example is the “Pinnacle” penthouse at the iconic Woolworth Building in Tribeca. Developer Alchemy Properties listed the quadplex for an eye-popping $110 million, in 2014, and the 12,000-square-foot unit was splashed across headlines.
When news of the unit’s asking price first broke, “you should have heard the chatter,” Barron said. “We knew that that number didn’t make sense.”
Barron would prove right when after six years and multiple price cuts, the 12,000-square-foot unit finally sold for $30 million.
Even the developer acknowledged the sale was a flop. Ken Horn, president of Alchemy Properties, told the Wall Street Journal, “on the surface, that number is not a good number.”

Alchemy likely wasn’t aiming for quite as big of a price drop, but Barron said some developers may intentionally set a price higher than they expect to get to make it seem that buyers are getting a deal.
While the closing price could be as much as 50 percent lower than the initial ask, it could meet or even exceed the developer’s expectations. But the strategy has its detractors.

“It’s not aspirational pricing, it’s overpricing,” said John Gomes, co-founder of Douglas Elliman’s Eklund-Gomes team.

Gomes said an artificially high price can damage the market because it skews data on pricing and discount comparisons, and can lead sellers in similar buildings or neighborhoods to believe their homes can sell for more than is likely.
Instead, Gomes said he aims to price properties as close as possible to where he thinks they will trade. Doing otherwise, he said, could damage his credibility.
Though exaggerated prices can bring visibility to a project, to Gomes, media coverage of multiple price reductions and the possibility of a lackluster deal at the end aren’t worth the risk.
“I’m not afraid to price something at $100 million if it’s worth $100 million,” Gomes said. “I don’t have to use the tactic of overpricing something to get attention.”
But not all brokers share Gomes’ sentiment, though they may not openly acknowledge doubts about a lofty asking price.

“There are agents out there who purposefully price everything high to get the listing,” Compass’ Leonard Steinberg said. He added that for some, “attention from the press with the high price and then again when they drop the price” is part of their marketing toolbox.
Aside from the Central Park Tower listing, Serhant has drawn criticism for other high prices. In 2014, the former reality TV star listed a penthouse in Battery Park City at $118 million — an ambitious goal for a resale in that neighborhood.
Serhant was later ousted from the listing, the most expensive on the market at the time. The penthouse, at the Ritz-Carlton Residences, went to the auction block in 2017, but did not sell, and hit the market again in 2021 at $24.5 million, only to be removed a year later.
In the Hamptons, Bespoke founders Cody and Zach Vichinsky are notorious for setting unprecedented prices.
The pair listed 105 Jule Pond Road for $175 million in 2017. By 2019, they had cut the price to $145 million. The estate finally sold for $105 million. It was still one of the most expensive sales in Hamptons history.


But not everyone agrees that the high prices are a negative for the industry, and the Vichinskys’ nine-figure sale might support that view. Sometimes shooting for the stars and missing can still mean walking away with more money than originally expected.
Barnett scored $100.5 million from Michael Dell for a One57 penthouse in 2014, shocking even veterans of the luxury market. Later, Vornado asked $100 million to $250 million for the six priciest units at 220 Central Park South, which turned out to be the most profitable condominium ever.
Long before that, the Zeckendorfs’ pricing at 15 Central Park West and 520 Park Avenue projects that redefined luxury seemed outrageous, but the developers largely got what they sought. Within a few years, the initial prices looked modest.
“What is remarkable about New York City is that we really never know where the ceiling is,” Douglas Elliman’s Michael Graves said. “In the rearview mirror, some things look aspirational, but sometimes those numbers happen.”

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[David Goldsmith]

New York New Condo Sales Slump

Sales of newly built units fell below pre-pandemic levels for the second month, as all-cash sales notched an all-time high in Manhattan.

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New condo sales yet to rebound in New York​

Deals fell below pre-pandemic levels for the second straight month
Once a beacon in New York’s residential market, sales of newly constructed condominium units fell to below pre-pandemic levels for the second consecutive month in October.
The 181 contracts signed last month totalled $454 million, with a median list price of $1.5 million and a price-per-square-foot of nearly $1,600, according to data firm Marketproof.

“This is two months, back-to-back, when numbers have declined,” Marketproof’s Kael Goodman, said. “The numbers are definitely soft.”
While developers have more motivation to sell than homeowners who locked in historically low mortgage rates during the pandemic, limited inventory has buoyed new condo prices.

Fewer than three years of inventory remain for condos priced $1.5 million to $4 million, according to Marketproof. Luxury condos priced up to $8 million have 3.7 years of inventory.
Projects with the most contract signings included Related Companies’ 15 Hudson Yards which has struggled, Witkoff and Access Industries’ One High Line and Extell Development’s Central Park Tower, all asking $20 million or more. The priciest closing, just shy of $3,800 per square foot, was at SJP Properties’ 200 Amsterdam.
Dollar volume for units priced north of $4 million fell 8 percent from September to $210 million. Top selling projects were GFI Capital and Elliot Management’s 111 West 56th Street, which put eight units into contract, and 1289 Lexington Avenue by Zeckendorf Development on the Upper East Side which put four units into contract.
In Brooklyn, a burgeoning locale for new condo inventory, top selling projects included Tishman Speyer and Vanke’s 11 Hoyt Street in Downtown Brooklyn and 171 Calyer Street in Greenpoint. Each project put four condos into contract.

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The median list price for new condos in Brooklyn rose 30 percent from September to $1.4 million, and dollar volume rose 8 percent to $89 million. Median price per square foot grew 10 percent to $1,400. The outer borough is on pace to eclipse Manhattan condo sales in five years.

Fortis Property Group closed Brooklyn’s priciest units last month, selling two condos at Olympia Dumbo for north of $2,600 per square foot. Douglas Elliman’s Barton Barrett Marshall team recently took over sales from the brokerage’s Eklund Gomes team at what may prove to be Brooklyn’s most expensive residential project ever.
In Queens, Chris Xu’s Skyline Tower put six units into contract last month, and Ampiera Group’s project in Woodside, at 40-22 61st Street, notched ten signings. Total dollar volume rose 16 percent to $37 million, the median price dropped by 27 percent to $855,000 and median price per square foot fell 10 percent to $1,200.
Whether the baseline for new condo sales was reset during the last two months may depend on macroeconomic conditions, but dramatic changes in supply or demand seem unlikely.
“If mortgage rates tick down a little, that would be a positive,” Goodman said. “But the percentage of cash buyers is already at an all-time high,” accounting for 72 percent of new development sales in Manhattan last month.

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[David Goldsmith]

Valley Bank Can Proceed with Fortis Project Foreclosure

A judge approved Valley Bank’s motion to foreclose on Fortis’ loan at 161 Maiden Lane, a disastrous Financial District project.

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Bank can pursue foreclosure at Fortis’ Seaport tower: judge​

Developer of stalled, tilting skyscraper loses legal round

After years of tortuous litigation, Valley Bank can foreclose on a $120 million loan for Fortis Property Group’s Seaport Residences, a luxury condo tower that has sat unfinished and exposed to the elements for three years.
Judge Barry Ostrager on Thursday granted the bank’s motion for summary judgment at 161 Maiden Lane, allowing the bank to move forward with its foreclosure on the loan, of which $90 million has been funded.

The decision marks a new chapter for the disastrous Financial District project, which has been repeatedly delayed by lawsuits, notably over alleged design defects that have left the tower leaning a few inches to the north.
The bank can now move toward an eventual sale of the property, but it is unclear what someone might pay. Whether the tower can be salvaged is not certain, although an engineer hired by Fortis estimated in January that it would cost $106 million to complete it.

Ostrager left the door open for the parties to work out a deal, despite the bank and Fortis having repeatedly failed to do so during mediation. The decision in Valley’s favor gives the bank more leverage in any negotiations.
The judge noted that he is retiring at the end of the year and that further litigation will be the headache of a new commercial division judge.
A referee will now be appointed to decide what is owed to the bank and whether the site should be sold as one parcel. A status conference is slated for Dec. 6.
Fortis has filed a separate lawsuit against Valley Bank, and some of the developer’s counterclaims in the foreclosure action will be consolidated with it. In his order, the judge noted that the lawsuit does not bar foreclosure on the mortgage, but could entitle Fortis to monetary damages.
The developer could also appeal Thursday’s decision. A spokesperson for Fortis said the developer is “evaluating all options.”

“The court has validated our lender liability claims by preserving our lawsuit for breach of contract and fraud, for which the court previously stated the lender has significant potential liability,” the spokesperson said in a statement.

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A representative for Valley declined to comment. An attorney for the bank did not immediately return messages.
Bank Leumi USA, which was acquired by Valley last year, filed its foreclosure action in December 2020. The lawsuit accused Fortis of violating the terms of its loan agreement by failing to get a temporary certificate of occupancy by June 2020 and then failing to repay the loan when it matured in December of that year.
Fortis sued the bank in October, alleging that it violated their agreement by failing to issue payments on the loan since March 2019. The project’s contractors went months without being paid, and in July 2020, workers walked off the site.

During a hearing on the motion, the judge referred to the case as “an endless war of attrition” and lamented that the project is likely worth considerably less than it was three years ago.
“The never-ending stream of discovery disputes, motions and appeals has resulted in an exponential devaluation of the collateral during the multi-year period in which construction financing was available at extremely reasonable rates,” the judge wrote in his decision.

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The bank and its co-lender Harel Insurance Company came close to selling the loans to an entity tied to developer Shelly Listokin, but he filed a bankruptcy action last month to avoid closing on the deal. If the deal had been finalized, Listokin would have taken the bank’s place in the foreclosure proceedings.
Fortis bought the property, along with an adjacent site, for $64 million in 2013. The developer planned an 80-unit condo tower with a projected sellout of $272 million. Trouble began after a construction worker fell to his death on the site, which was then shut down for several months.

More stoppages followed, culminating in an ugly court fight between Fortis and its construction manager, Pizzarotti, in which the parties blamed each other for the tower’s lean. That lawsuit is ongoing.

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[David Goldsmith]

Chinese Developer Sticks Hell’s Kitchen Condos in Bankruptcy

A lender has been trying to foreclose on Xinyuan Real Estate’s Bloom on 45th property in Manhattan.

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Chinese developer puts Hell’s Kitchen condo in bankruptcy protection​

Lender trying to foreclose on 92-unit luxury building

As Xin Development Group tries to avoid foreclosure on its Hell’s Kitchen luxury condo project, the Chinese developer placed the property into bankruptcy protection.
Xin, a division of China-based Xinyuan Real Estate, placed Bloom on 45th at 500 West 45th Street into bankruptcy protection on Jan. 7, PincusCo reported. The developer claimed the 92-unit luxury project is worth $123 million.

Xinyuan’s grip on Bloom on 45th has been tenuous at best in recent months. In the fall, mezzanine lenders filed to foreclose on the property, even going so far as to schedule an auction. The state court judge issued a temporary halt on any sale; a hearing on the matter is called for Monday.
Xinyuan struck back in November, suing debt holder BH3 Management, and now the two sides are battling over a forbearance agreement. Xinyuan claims it had to file for bankruptcy protection because BH3 was being “aggressive” in efforts to foreclose on the property. According to the petition, the lender had alleged that the property was in default, and was looking to initiate a UCC sale based on this.

Xinyuan completed the project in 2020, but has been unable to sell most of the units. Only 32 of them are sold, according to the bankruptcy petition, leaving a valued $70 million worth of real estate unsold. The commercial condo units, however, are largely leased, anchored by Target.
BH3 owns $79.7 million in senior and mezzanine debt. Xinyuan claims it is making good faith efforts to resolve the dispute between the two sides, alleging BH3 is failing to do the same.

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The Real Deal could not immediately reach Xinyuan for comment. BH3 did not immediately respond to a request for comment.
Xin’s issues in the Big Apple keep popping up. The developer defaulted on a loan at the $372 million Oosten condo project in Williamsburg, which prompted an auction for the 21 unsold units at the property.

Maverick Real Estate Partners also filed to foreclose on a Xin property on Northern Boulevard in Flushing, Queens, where the developer was planning a 17-story mixed-use complex with 269 condo units on the former site of the famed RKO Keith’s Theater.

 

[David Goldsmith]

Chen Family’s Garment District Condo Conversion in Bankruptcy

The Chen family has put a condo redevelopment at 335 West 35th Street into bankruptcy as it seeks funding to complete the project.

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Stalled Garment District condo conversion in bankruptcy​

Chen Foundation at impasse with lender as project debt hits $70M

The saga of a Garment District conversion from factory to fancy condos has a new chapter: Chapter 11, that is.
The Chen family has put the entity that owns 335 West 35th Street into bankruptcy as it seeks funding to complete the project, records show. It also put a Soho property it used as collateral into bankruptcy.

The family bought 335 West 35th Street, a vacant, 12-story building near Penn Station, for $50 million in 2016, planning to redevelop it. The plan was for condo units, to be sold for a collective $99 million, and space for the family foundation’s TF Chen Cultural Center.
Shanghai Commercial Bank agreed in 2017 to lend the Chens $34 million, consolidating earlier loans and setting a December 2021 maturation date. The first sign of trouble surfaced in 2021, when the developer sued a loan broker it had retained for failing to close on $82 million in new financing from a South Korean firm in 2020.

Interest rates were still low at the time, but the pandemic had brought international travel and capital markets to a virtual standstill.
The construction lender, Shanghai Commercial Bank, refinanced the condo project in November 2020 for $60.6 million. But eventually it refused to keep funding the endeavor, the Chens’ bankruptcy attorney said.
“The condo project is 75 percent done and the borrower is in position to borrow another $15 million to $18 million, but the bank won’t let them,” said the attorney, Leo Jacobs. “Now it’s as if it became a loan-to-own.”
For the Chens, more than just 335 West 35th is at risk: They had used their Soho property at 250 Lafayette as collateral and made various guarantees to secure the loan. According to the bankruptcy documents, the ownership entities are valued at $50 million to $100 million with liabilities in the same range.
The 73,000-square-foot property on West 35th Street is 85 percent owned by Neo Image Enterprises and 15 percent by New Tent. Together the entities owe over $70 million.

Designed by Issac and Stern Architects, the building is slated to have 65 apartments plus a penthouse on a newly constructed floor, as well as a roof deck, two-story gallery for the cultural center, gym and bike storage. It owes the city $2.4 million in late property taxes.
Google photos in August 2022 show the building clad in netting with a sidewalk shed in front. The most recent permit, for elevator work, was filed Jan. 5.
The Soho property used as collateral, a four-story loft building, is owned by the Chen Foundation, which owes $25.4 million on the mortgage, also from Shanghai Commercial Bank. The foundation is affiliated with renowned Taiwan-born painter Dr. Tsing-Fang Chen.
It is not clear why the project fell into trouble, but at one point last year the contractor stopped taking direction from the developer, Ted Chen, and instead was looking to the bank, Jacobs said. City records show a stop work order was issued in August after the site safety director quit.

The 2017 loan was renegotiated in 2020 but the developer needed more funding to complete construction. After the loan from South Korea fell through, the Chens tried to find other mezzanine lenders but allege they were thwarted by Shanghai Commercial Bank.
“Because of that, the clients can’t refinance and can’t get out from under. The lender keeps charging interest and the project is falling into distress,” Jacobs said.
No one at the Shanghai Commercial Bank was available to comment.

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[David Goldsmith]

https://www.nytimes.com/2024/01/28/business/china-evergrande.html

Evergrande Will Be Dismantled, a ‘Big Bang’ End to Years of Stumbles​

After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.
By Alexandra Stevenson

Months after China Evergrande ran out of cash and defaulted in 2021, investors around the world scooped up the property developer’s discounted i.o.u.’s, betting that the Chinese government would eventually step in to bail it out.
On Monday it became clear just how misguided that bet was. After two years in limbo, and with over $300 billion in debt, Evergrande was ordered by a judge in Hong Kong to liquidate, a move that will set off a race by lawyers to try to find and grab anything belonging to Evergrande that can be sold.
In a small courtroom on the 12th floor of Hong Kong’s High Court building, Evergrande’s lawyers pushed for a last-minute deal. They argued that a liquidation would hurt Evergrande’s business and not help creditors get their money back. They wanted more time to try to make a deal with Evergrande’s creditors.
But after 40 minutes of debate, Linda Chan, the bankruptcy judge presiding over the case, made her decision to issue an order telling Evergrande to wind up its operations, citing the company’s inability to bring a concrete proposal to the court for one and a half years.

“I think it would be a situation where the court would say enough is enough,” Ms. Chan said.
The order means that Evergrande, which has been limping along for two years, unable to pay its debts or function normally but still in operation, will now likely face a protracted period dismantling a massive business with projects that span hundreds of cities and unrelated businesses like an electric vehicle company.

The order sent shock waves through the company’s publicly listed shares in Hong Kong, pushing the stock price down more than 20 percent before trading was halted. The court decision is likely to reverberate through China’s beleaguered property sector and financial markets that are already skittish about China’s economy.
There isn’t a lot left in Evergrande’s empire that still has value. And any assets that are valuable may be off limits because property in China has become intertwined with politics.

Evergrande, as well as other developers, overbuilt and overpromised, taking money for apartments that had not been finished and leaving hundreds of thousands of home buyers waiting on their units. Dozens of these companies have defaulted, leaving the government frantically trying to force them to finish the apartments, putting contractors and builders in a tough spot because they have not been paid for years.

What happens next in the unwinding of Evergrande will test the belief long held by foreign investors that China will treat them fairly. The outcome could help spur or further tamp down the flow of money into Chinese markets when global confidence in China is already shaken.
Our business reporters. Times journalists are not allowed to have any direct financial stake in companies they cover.
“People will be watching closely to see whether creditor rights are being respected,” said Dan Anderson, a partner and restructuring specialist at the law firm Freshfields Bruckhaus Deringer. “Whether they are respected will have long-term implications for investment into China.”

China needs investments from foreign investors now more than ever in its recent history.
Financial markets in mainland China and Hong Kong — a city that has for years been an entry point for foreign investment — have received such a blow that officials are scrambling to find policy measures like a stock market rescue fund to shore up confidence. On Sunday, they moved to stop short selling, a practice that allows investors to bet against a stock.

China’s housing market shows little signs of returning to the boom days, in part because Beijing wants to redirect economic growth from construction and investment.

Rising diplomatic tensions between the United States and China, which have led to large outflows of foreign money from China, are not helping.

Investors are looking to the resolution of the Evergrande case to see how China will handle disputes over its deadbeat companies, of which there are dozens in the property sector alone.

Specifically, they will want to see whether the people given the task of carrying out the liquidation will be recognized by a court in mainland China, something that historically has not happened.
Under an agreement signed in 2021 between Hong Kong and Beijing, a mainland Chinese court would recognize the Hong Kong court-appointed liquidator to allow creditors to take control of Evergrande assets in mainland China. But so far only one of five such requests to local Chinese courts has been granted.
Monday’s decision had already been delayed multiple times over nearly two years as creditors and other parties agreed to adjourn to give the company more time to reach an agreement with creditors on how much they might be paid.

As recently as last summer, Evergrande’s management team and some of its offshore creditors that had lent the company money in U.S. dollars in Hong Kong seemed to be closing in on a deal. The talks hit the brakes in September when several high-level executives were arrested and, eventually, the founder and chairman, Hui Ka Yan, was detained by the police.

The court’s decision on Monday was “a big bang,” Mr. Anderson said, that will “lead to something of a whimper as liquidators chase assets.”
Speaking to reporters outside the courtroom on Monday, a lawyer representing the main group of creditors said they were not surprised by Ms. Chan’s ruling.
“We’ve been ready, willing and able for the entire process to reach a deal with the company,” said Fergus Saurin, a partner from Kirkland & Ellis, which is advising the creditors. “There has been a history of last-minute engagement, which has gone nowhere, and in the circumstances, the company only has itself to blame for being wound up.”

 

[David Goldsmith]

Apparently if developers do get there socialist welfare checks they will just sit on their asses and do nothing. What an entitled bunch of Welfare Queens.

Condos Can’t Fix New York City’s Housing Shortage

A turn toward condo development is underway but not moving fast enough to meet demand after the expiration of 421-a.

therealdeal.com

Don’t expect condos to fix NYC’s housing problem​

Lapse of tax break has stalled rental projects, but condominiums have issues, too

Since the lapse of 421a, the tax break that powered rental housing production in New York City, new multifamily construction has ground to a halt. That hasn’t stopped apartment developers from prospecting for opportunities.
They’ve been left to focus on one thing: condos. But the future is hazy at best.

Many multifamily projects are stuck in lending limbo, unable to get construction financing over concerns that they’ll miss the June 2026 completion deadline for 421a projects that qualified for the abatement before it expired in 2022.
Developers may wish those project sites would become new condos rather than dead weight, but lenders are not champing at the bit.

“Capital markets will have to shift to lending on condo projects,” said Sam Charney, CEO of Charney Companies, which is at work on 1 million square feet of multifamily in Gowanus, Brooklyn. By allowing 421a to expire, “the state has forced for-sale products on developers.”
In Gowanus, once a buzzing market for multifamily development as longtime owners cashed out old industrial properties, land sales have largely gone quiet. Meanwhile, dozens of projects there risk missing the completion deadline. For those, a workaround would allow some to qualify for a 421a substitute: The state would take over the site and lease it back to the developer, as long as the project got underway by June 2022.

The holdup​

New York Gov. Kathy Hochul and New York City Mayor Eric Adams support renewing 421a, but the state legislature, which considered the program too generous, has been reluctant to bring it back. Without it, building multifamily has become financially untenable because of the high property taxes on New York City rentals.
Add to that high borrowing rates, long project timelines and a lack of political will to build affordable condos, and the idea of shifting to condos is a lot harder than flipping a “for rent” sign to “for sale.” While multifamily development is stuck in a political morass, the next condo development cycle is stuck in a financial one.

“Lots of people would love to build,” said Seth Weissman, founder of private credit lender Urban Standard Capital. “Raising equity today is challenging, whether from institutions, family offices or high-net-worth individuals.”
“In the summer, lenders were still taking the risk” on 421a projects, Weissman said. Not anymore. Lenders often require borrowers to finish construction a year ahead of the state’s deadline. It’s too late now for sizable projects to get a construction loan.
With mortgage rates still elevated, pure-play condo builders are likely to have some lagging inventory, making it harder to raise funds for new projects, and builders may find equity partners gun-shy.

“Condo deals are like freight trains. They take time to build momentum but then they move fast.”

JUSTIN PELSINGER, CHARNEY COMPANIES

A strong rental market, buoyed by the supply crunch that 421a was meant to ease, has also complicated a shift toward condo projects. Many developers would rather wait for tax relief on rental projects than switch to condos.

Owning apartments in New York City was described by one developer as a “no-brainer.” Rentals provide decades of steady income and are considered inflation-proof because rents can be adjusted with the economy. By contrast, condo projects require pricing units for a market three years away.
“You get one bite at the apple,” Charney Companies’ Justin Pelsinger said. “Not everyone is comfortable making those kinds of forecasts.”
That goes for lenders, too. They know New York City’s landscape is littered with the carcasses of troubled condo developments.

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Even if financing were available to turn stalled rental projects into condos, developers say it’s not a decision to be taken lightly.

“Condo deals are like freight trains,” said Pelsinger. “They take time to build momentum, but then they move fast. It’s hard to change the direction of a train at high speed, and once a construction loan closes, projects are moving fast.”
Also, because lenders must approve changes to how loans are used, and given that condos are riskier than rentals, getting approval is an uphill battle.

Jogging in place​

Weissman pointed to one rational approach: doing nothing. “If somebody can wait until there is a new 421a program,” he said, “that is the most likely path.”
However, it’s not always possible for developers to stay on the sidelines, especially when no one knows if 421a will return.

“Developers are a certain breed. They can’t sit still,” said 421a attorney YuhTyng Patka of Adler & Stachenfeld. “We’ve seen many in this period of relative ‘free time’ consider whether condo development is a good option for them.”
One antsy developer is Shlomi Avdoo, who in November — after 421a expired for new projects — went into contract on a single-story fuel oil building at 601 Union Street in Gowanus.
Avdoo’s zig to the market’s zag is a bet on 421a being restored. If that happens soon, the price of the property will likely have been a bargain. If the politics get messy and lawmakers don’t act, he’ll have a monkey on his back and pay debt service for the pleasure.
“We’re sort of stuck, and we have a tough decision to make,” said Avdoo. “We’ll hold it for a year or two — hopefully, it’s just a year. We’d love to own [a rental project] there long-term, but our focus is on condos at the moment.”
One complication is the city’s requirement for affordable units in the rezoned Gowanus area. Avdoo is considering an unusual, hybrid project that meets that mandate and also pencils out: a condo with some income-restricted rentals.

A city divided​

Stalled multifamily projects in the outer boroughs may be more likely to become condos, according to Laura Tomana, a new-development analyst formerly with Brown Harris Stevens Development Marketing and CORE, because they better match the entry prices that condo buyers seek in such neighborhoods as Long Island City, Astoria and Crown Heights. Manhattan remains a marketplace for luxury projects.
Hochul recently put the onus on real estate groups and labor unions to hash out a new 421a, but even if they do, there’s no guarantee that legislators will pass it. And so everyone waits.
“Nobody is doing deals for office. Nobody is doing deals for multifamily,” said land expert and former Newmark analyst Duane Burress. “Brokers are trying to project to sellers that this is the time to get in, and once there’s a new 421a regime, prices will go up.”
It is, as they say in the business, a tough sell.

 

[David Goldsmith]

Manhattan New Condo Sales Rebounded in January

Meanwhile, sales in Brooklyn were flat despite cooler mortgage rates.

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Manhattan rebounds while Brooklyn remains flat, in January new condo sales​

Extell leads luxury market, including $174M at Central Park Tower

A decline in mortgage rates in January helped boost the sale of new condos in New York City to levels not seen since the summer, the last time rates were consistently below 7 percent.

Buyers signed over 200 contracts last month, a 30 percent increase from December and the highest amount since August, according to a Marketproof report. Dollar volume surged 87 percent, bolstered by a $149 million contract at Extell Development’s Central Park Tower.
“Initial indicators point to a positive rebound in 2024,” said Marketproof CEO Kael Goodman. “In the second half of 2023, we noted an increase in mortgage rates and a decrease in contract activity. As we conclude the first month of 2024, these trends are reversing.”

Goodman predicted that home prices in New York will continue to rise due to limited inventory and few new projects coming to market. Last year, no offering plans were submitted in the city’s central borough for buildings with more than 100 units, Goodman noted.

Manhattan, up and at’em​

The number of all cash deals in Manhattan fell in January to 67 percent, down from 72 percent in December, another sign that a fall in mortgage rates has given a boost to sales.

However, luxury contracts priced above $4 million, despite being less subject to interest rates due to more all-cash offers, rose to their highest level since August.
Extell led the luxury market with 4 contracts at 50 West 66th Street, and $174 million in volume at Central Park Tower, where 57 percent of the building’s 178 have units sold since 2019.
In January, buyers signed 113 contracts in Manhattan. The median price per square foot in the central borough fell 8 percent to a little more than $2,000.
Related Companies’ Tribeca Green, a cooperative conversion in Battery Park City, sold the most, with 9 new contracts. Corcoran Sunshine has sold 147 of 274 units in the last 10 months. Claremont Hall, a condo project in Morningside Heights developed by L+M Development Partners and Lendlease, sold the second-most, with 7 new contracts reported last month by Corcoran Sunshine.

Jammed in Brooklyn​

Despite cooler mortgage rates, sales in Brooklyn were unchanged last month, with buyers signing 78 new contracts. Total dollar volume declined by 13 percent to $115 million, and the median price per square foot ticked down to about $1,400.

JDS Development’s Brooklyn Tower was the borough’s most active building, with nine deals asking from $980,000 to $3.6 million. Douglas Elliman Development Marketing has sold 19 of 143 units in the building, which remains under construction, since May 2022.
In Greenpoint, buyers signed 5 new contracts at Core Development Group’s 235 North Henry Street for two-bedroom condos asking $1.2 to $1.4 million.
The priciest closing in Brooklyn was for a penthouse at RAL Companies’ Quay Tower, where the buyer nabbed an 8 percent discount to close at $9 million, or about $2,500 per square foot. Oliver’s Realty Group and Vanke are partners on the project.

Quixotic Queens​

In Queens, of contracts reported, the median price per square foot fell to about $1,300 from nearly $1,500, while the median total price rose to $815,000 from $785,000.

Chris Xu’s Skyline Tower notched 8 contracts on studios to two-bedroom units asking between $754,000 and $2.1 million. Modern Spaces is selling 130 units remaining of the building’s initial 800-unit inventory. Century Development and ZD Jasper’s Lucent 33, at 37-34 33rd Street in Long Island City, had five contract signings; Nest Seekers International is handling sales.
The priciest unit to close in Queens last month was a penthouse at ZD Jasper and Ascent Development’s The Greene tower at 4530 Pearson Street in Long Island City, for nearly $1,700 per square foot.

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