Are developers playing "chicken" with the market?

David Goldsmith

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Anyone want to guess what percentage are in contract? Since they won't say it's probably not a great number. We can see how poorly City Point and Manhattan Square are doing. I also think they were unofficially on the market for a year before the formal "sales launch."

Closings kick off at Central Park Tower​

Developer Extell last month lined up $380M in mezz financing for NYC’s priciest condo project​

Move-in day is approaching for buyers at the world’s tallest residential tower.
Gary Barnett’s Extell Development is commencing closings at Central Park Tower, the developer announced Thursday. The 179-unit project at 217 West 57th Street has a projected sellout of $4 billion, which makes it the most expensive condominium project in New York City.

The two- to eight-bedroom units range in size from 1,435 square feet to 17,500 square feet. More than 20 units are asking more than $60 million and the penthouse is asking $95 million.

As a result of oversupply, the market for luxury condos has fallen dramatically since the project was conceived. More recently, the pandemic froze the city’s sales market, though contract activity is now picking up.
Sales launched at the project in October 2018, and Extell tapped Corcoran Sunshine Marketing Group in October 2020 to join the developer’s sales team as co-exclusive brokers.

Under the terms of its $1.14 billion construction loan, Extell needed to have $500 million worth of units in contract by December 2020. That month, Barnett raised $380 million in mezzanine debt, which matures at the end of 2021 but comes with the option to extend for another 18 months. Filings on the Tel Aviv Stock Exchange also indicate that the developer simultaneously modified certain sales requirements tied to the senior loan, but it wasn’t clear exactly which terms had been changed.

A representative for the developer declined to share how many units are in contract.
The 1,550-foot-tall tower, which topped out in September 2019. Extell is developing the project with SMI USA, the U.S. subsidiary of Shanghai Municipal Investment.
 

David Goldsmith

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Sales at One Wall Street were scheduled to launch 2 years ago and the project to wrap last year. How long can they delay due to there being no market?

FiDi landmark One Wall Street’s new condos will average $3M​

Jul 23, 2018, 10:00am EDT
The 50-story Art Deco bank building is being converted into 566 apartments

The residential conversion of the Financial District’s One Wall Street has been trudging along for quite some time now, but things are finally picking up, and the New York Times has all the new details.

Developer Macklowe Properties is planning to launch sales on the 50-story building’s 566 condos sometime this winter, and apartments here will cost $3 million on average, which is just on par for new developments in the neighborhood, according to the Times. One Wall Street will also have a triplex penthouse, which is expected to ask upwards of $38 million.
We also now know that 304 of 566 apartments will be studios and one-bedrooms, while the rest will be a mix of two, three, and four-bedroom homes. The unit make-up suggests that the developers are targeting young couples or single people living in the neighborhood, which now has an ever-expanding presence of residential development.

Of the total units, 47 will have private terraces. The units will have floors made with engineered wood, a Miele appliance package that includes washers and dryers, and residents here will have the option of choosing glass or lacquer cabinets in the kitchen.
Amenities announced so far include an enclosed swimming pool, and a roof deck. In all, the amenities will be spread out over 100,000 square feet. In addition, One Wall Street will also have a Whole Foods, and additional space for commercial tenants. The SLCE Architects-designed conversion is expected to wrap in 2020.
 

David Goldsmith

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How Do You Chop 20 Stories Off a Too-Tall Building?

Now that the 52-story tower at 200 Amsterdam Avenue is almost done, it may soon have to be partly undone, like a construction film running in reverse. If the appeals court that will hear the case starting Wednesday upholds a judge’s ruling that the building is illegally tall, the crews now putting on the final touches will have to start unraveling the top 20 or so floors, breaking freshly installed glass, slicing through new steel beams, and grinding down recently poured concrete. If the never-used bathroom fixtures can’t be salvaged, they may have to be smashed, at considerable risk to the workers. “You break them, and they’re like razor blades,” says Mel Ruffini, an executive at Tishman Construction. “Glass, you expect to get cut from. Toilet bowls, not so much.” All that wastage has to be expelled and carted away. If the whole shebang were coming down, workers could run a rubble chute through the shaft to the basement, but here there will be actual working elevators in the way, so the chutes will have to be fastened to the still unscuffed exterior.
The building sits on a bizarre knot of different parcels, and figuring out which rules apply has been an oracular exercise even by the standards of New York’s inscrutable zoning code. Complexity favors developers equipped with expensive legal advice, which is how SJP Properties persuaded the Department of Buildings to issue a permit for a 668-foot spear sticking into the flank of the Upper West Side. The narrow, stretched-out tower designed by Elkus Manfredi reaches its kinda–sorta–neo–Art Deco–ish crown via a series of setbacks that make it look like a staircase in the wrong aspect ratio. Any tall building can unleash the usual It’s out of character! versus More housing now! shoutfest, but this one has turned area residents into self-appointed land-use experts. If you walk up Broadway and overhear someone saying “gerrymandered lot,” chances are they’re talking about 200 Amsterdam rather than congressional districts.

If the ruling stands, Upper West Siders will witness a slow-motion decapitation from the inside out, which is about as gruesome as it sounds. “Taking down a building is more surgical than erecting one,” says Jay Badame, the president of construction management at the engineering firm AECOM. “It’s become an art and a science combined.”
The unbuilding of skyscrapers happens regularly in New York, and even lopping the top off isn’t unprecedented. The same fate befell 108 East 96th Street in 1991, when developers agreed out of court to slice 12 illegal floors off a 31-story tower while it was still under construction. And truncating 200 Amsterdam is a relatively routine operation when compared to the razing of the 700-foot Union Carbide Building at 270 Park Avenue, eventually to be replaced by a 1,200-foot headquarters for JP Morgan. In a city too packed for implosion or wrecking balls, disassembling an entire structure is slow and dangerous work, planned by specialized engineers. (Excising one part, even as residents are moving into the rest, gives the process an extra layer of delicacy.) When the building is going up, a crane hoists equipment and materials into place as they’re needed, often directly from the back of a flatbed truck. When it’s coming down, though, you need someplace to toss all the rubble, and piling the detritus of too many discarded stories on the floor below can get you into structural trouble.
So can yanking out a length of steel without the proper preparation. “As you’re deconstructing the building, you’re also bracing it, so you don’t leave something freestanding that can topple over,” says the Department of Buildings first deputy commissioner Gus Sirakis. It’s an elaborate puzzle that can involve as much building as breakage: shoring up floors, supporting steel skeletons, erecting scaffolding, installing chutes, and positioning cranes. Sirakis reviews the options for avoiding collapse, sounding like he’s planning a military operation. “You can sling a beam to the crane while it’s being cut. You might have an iron worker doing the torch cutting but it’s not the same as bolting up your spandrel beam in place. You might have to pull exterior frame inward as you cut it. Sometimes you do the demolition with a grappling arm, cut and grip the [structural] member at the same time.”

As is often the case, disaster helped write the procedures. In 2007, a fire broke out near the top of the Deutsche Bank building on Liberty Street, which had been irreparably damaged on 9/11 and was being torn down. The firefighters who responded discovered that workers had disabled the sprinkler system and the standpipe, laid wooden platforms over one staircase, and partially demolished another. Two firefighters were killed and dozens were injured. The city revised its regulations, requiring safety systems to remain functional even as the structure around them dissolves.
As with everything about living in New York, tight quarters make everything more complicated. At 270 Park, there was nowhere to plant a tower crane at ground level, so Tishman, the company running the project, built a temporary structural balcony onto the doomed tower. It’s like giving your executioner a piggyback ride so he can reach your throat.
Controversial Upper West Side tower isn’t too tall, appeals court says

The controversial, 52-story apartment tower at 200 Amsterdam Ave. won’t have to take a 20-story haircut after all – because it isn’t really too tall, a four-judge state panel unanimously ruled on Tuesday.
The Appellate Division upheld the legality of the tower developed by SJP Properties and Mitsui Fusodan. The panel slapped down a lower-court judge’s earlier decision that they must take down 20 stories because the structure supposedly violated zoning rules.

Developers and landlords around town sweated out the decision, as an upheld order to tear down part of the building could have impacted many others – both in construction and standing. Even the MetLife Building at 200 Park Avenue could have faced legal challenges as it relied on the same zoning-law interpretation used at 200 Amsterdam.
State Supreme Court judge Franc Perry ruled in February 2020 that the developers had used “deceptive practices” and “violated city regulations” in putting up the tower at Amsterdam Avenue and West 71st Street, even though it had valid permits from the Department of Buildings since 2017.
The city gambled that Perry would be overturned and allowed construction on the tower to continue.
The city Law Department joined SJP and Mitsui Fusodan in an appeal filed last fall. They argued that the project conformed with complicated, long-standing zoning rules that allowed combining whole and partial tax lots in order to create a bigger “footprint” for construction.

The appellate judges agreed, saying that while the zoning rules were “ambiguous,” the city’s Bureau of Standards and Appeals “rationally” interpreted them. The lower court “should have deferred” to the BSA, the judges ruled.
Because the ruling was unanimous, the plaintiffs face a high bar to bring the case to the Court of Appeals, the state’s highest judicial body. A unanimous decision can’t automatically be appealed to the higher court, but must receive permission from the Appeals panel to take up the case. Such requests are rarely granted.
Richard Emery, the lawyer for the Municipal Art Society and other groups that filed the suit, said he hoped the Court of Appeals would nonetheless review the decision, which he called “threatening for any community or neighborhood effort to control development.” The MAS said the ruling gives developers “carte blanche to tell the city what a zoning lot looks like” and called 200 Amsterdam’s “39-sided lot” a “direct and explicit violation of the law.”
But SJP chairman and CEO Steven J. Pozycki called the ruling “an unequivocal affirmation that 200 Amsterdam’s permit was lawfully issued … We thank the city for their support.”
 

John Walkup

Talking Manhattan on UrbanDigs.com
200 Amsterdam’s “39-sided lot”
This was pretty clever, although it would be great if the inventiveness that made this possible could be turned to more mundane affairs like keeping the sidewalks and streets clean or figuring out how to handle garbage without stacking it up on the curb...
 

David Goldsmith

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In my experience they are going about this in the wrong way if they are serious about moving units (which by the way they are going about it I don't think they are - to me it looks like a publicity stunt). In the 1990s there were a number of auctions, both on single new construction condominium buildings which were in trouble and needed to move a large number of units, and by lenders looking to move portfolios of foreclosed properties. In general the more units in the sale the more successful they were. What we saw was that the first couple of units in the sale went for lower prices, but as buyers lost out and the auction picked up excitement level prices rose through the end of the auctions. You had people who showed up primarily interested in one unit, but after they lost out on it found themselves bidding higher on another unit in the sale. That can not happen in single unit sales. Also, the larger the sale the bigger the marketing budget and the more participation in the sale. Having over 1,000 people show up and bidding against each other is a very effective way of generating excitement. And since bidders have no way of knowing who is there for which property they tend to assume everyone is interested in the same lot they are. This is one of the reasons art auctions are so successful.

Developer Matt Lee to auction off East Village condo​

Move recalls 2010 condo auction after Great Recession​

Developer Matt Lee’s decision to auction off a condo unit online later this month recalls another dire time in New York City’s new development market.
In 2010, in the aftermath of the Great Recession, Paramount Realty USA held an auction of six unsold condos at a Madison Avenue development known as m127.

The unusual move by developer Cardinal Real Estate Investments garnered widespread media attention and massive interest from bidders. The nine-unit project had been on the market since 2007 and, facing the threat of foreclosure with only three sales in as many years, Cardinal decided a very public fire sale was the best option.

The developer set deeply discounted reserve pricing, with bidding starting at up to 68 percent off the units’ original asking prices. Buyers came out en masse to vie for the apartments and the auction was dubbed “a rare success” by observers at the time.
Now, as the pandemic rages and billions of dollars worth of new condos languish on the market, the same auctioneer is trying to repeat that success at Lee’s Alphabet City condo, Houston House.
“What we’re doing now is very reminiscent of that 2010 first developer auction,” said Paramount principal Misha Haghani, pointing to the vast quantity of unsold condo units and developers’ looming obligations to their lenders. “Not only is it a sign of the times on a micro level, I think it’s a much bigger sign of what’s to come.”

At Houston House, located at 298 East 2nd Street, Paramount will auction a two-bedroom unit spanning about 1,840 square feet. The price the developer wanted to sell it for is just over $3.4 million, but bidding will start at about half that — $1.75 million.
Sales at the seven-unit project launched a year ago, with prices ranging from $3.4 million to $4.5 million. The developer was aiming for a total sell out of around $27 million. The condo offering plan was declared effective in November after two units went into contract on the fourth and fifth floors.

Lee bought the property for $7 million in 2015 and financed the project with $14 million in loans now held by Maxim Capital Group, property records show. The developer did not address whether his relationship with his lender had any influence on his decision to move forward with the auction.
“Given the current climate, we thought we’d try something fun with one of the units here,” Lee said in a statement.

Haghani said that initially there were discussions about auctioning more of the units at Houston House, but the team settled on just one “to limit the opportunity for buyers.”
The firm is teaming up with celebrity broker Ryan Serhant and his former firm Nest Seekers International on the auction. The brokers will show the unit to interested bidders ahead of the auction, which is scheduled to start on March 23. They’ll also handle marketing and sales of the four remaining units.

Serhant said he believed Houston House was “an ideal candidate” for an auction and would “generate additional momentum for the remaining handful of units at the development” in a statement.
Paramount will conduct the auction process online over 48 hours. To participate, bidders must provide proof of at least $175,000 in liquid assets and a valid credit card.
 

David Goldsmith

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Closings commence and still 60% unsold.

Closings underway at Queens’ tallest building​

802-unit Skyline Tower aiming for $1B sellout​

The tallest building in Queens, Skyline Tower, is on its way to potentially breaking a record.
About 41 percent of the 801 units in the Long Island City condominium are in contract, according to Modern Spaces, which has been handling marketing and sales at the building since 2018. The first set of closings began last month.

The 67-story tower is aiming for a sellout of $1.09 billion, according to filings with the Attorney General’s office. It’s the first condo in the borough to try for a billion-dollar sellout.
view

Selling units at the building is a tall order in and of itself, considering the glut of unsold condos in Long Island City. Last summer, nearly 60 percent of units built since 2018 were reportedly languishing on the market.
Eric Benaim, CEO of Modern Spaces, said the incentives the brokerage offered to buyers and their agents changed every month to compensate for the tough market. Those incentives ranged from $5,000 gift cards for agents who brought in buyers, to having closing costs covered by the developer, Chris Jiashu Xu.

Xu developed the tower alongside Risland US Holdings and FSA Capital, and financed the project with a $502 million construction loan from a consortium of lenders led by JPMorgan Chase.
Prices for units in the building range from $600,000 to just over $3 million. Nest Seekers International’s new development arm is also marketing units in the building, according to the project’s website.
 

David Goldsmith

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Apparently the best selling New Dev sold 13% of it's units last year:

"The sales team at Tishman Speyer’s 11 Hoyt was recognized for the largest number of contracts signed, 63, which Corcoran Sunshine claimed was a citywide record."

 

David Goldsmith

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Healthcare data exec snaps up Woolworth condo at 40% discount

Developer Alchemy Properties first listed unit for $23M. It sold for $13.5M​

After selling his company late last year, healthcare data entrepreneur Rudra Pandey snapped up a sprawling condominium at the Woolworth Building at a hearty discount.
Founder of healthcare software company Deerwalk, Pandey and his wife Muna Joshi, purchased a 4,623-square-foot unit on the 29th floor of the tower last month, property records show. The unit sold for $13.5 million, or $2,920 per square foot.

Their unit, dubbed Pavilion B, spans two levels and includes two large outdoor terraces that total nearly 1,250 square feet. Developer Alchemy Properties had initially aimed to sell it for 40 percent more, or $22.6 million, according to the condo’s initial offering plan filed in 2014 with the Attorney General’s office. But as Manhattan’s luxury condo market softened, so did prices.

In 2019, Alchemy lowered prices at the 32-unit project, which occupies the upper 30 floors of the Woolworth Building, by nearly 10 percent. “We realize that the market has fallen a bit, and we’re realistic,” said Ken Horn, Alchemy’s founder and president, to the Wall Street Journal at the time.

The tower’s five-story penthouse, known as the Pinnacle, lowered its asking price to $79 million from $110 million.

Pavilion B’s price dropped to $15.95 million, according to the offering plan, and was first listed publicly in October. Its price dropped again to $14.75 million in January, and Pandey and Joshi agreed to buy the unit later that month. They closed the sale two weeks later in cash.
The deal came roughly a month after Pandey sold his company, Deerwalk, to Cedar Gate Technologies, a Connecticut-based healthcare performance management company backed by private equity firm GTCR and venture fund Ascension Ventures. The financial terms of the deal were not publicly disclosed.

Deanna Kory and Lynn Nguyen of the Corcoran Group had the listing. A representative for the couple and Pandey’s company did not immediately respond to requests for comment, nor did the brokers or developer.
The transaction is emblematic of the strong demand for new development and the deep discounts buyers are able to demand.

Since the final quarter of 2020, new development condo sales have been picking up. During the first 11 weeks of 2021, condos accounted for 70 percent of the luxury properties asking $4 million or more in Manhattan. Of those 208 condos, 56 percent were being sold by developers, according to the most recent Olshan Realty report.
Alchemy has sold 17 of 32 condos at the project, according to property records.
 

David Goldsmith

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The year ahead for Manhattan’s struggling condo projects​

Developers lower prices, faced with tension among investors and lenders​

Developers have been saddled with an oversupply of new condos for years, and now — thanks in part to the pandemic, which further hobbled the luxury market — they’re taking steps to turn the tide.
It’s estimated that there are more than 15,000 unsold units across 900 projects, largely in Manhattan, with a total listed value of $45 billion, Bloomberg News reported. That’s resulted in developers lowering their prices, investors amassing funds to buy unsold units and lenders aggressively foreclosing on lingering projects.

Urban Standard Capital found that there are about 300 developments where 15 percent of the units remain unsold. Led by Seth Weissman, the firm has $100 million to buy out those units at a discount.

At its Charlie West project, Elad Group agreed to sell 70 units to Tishman Realty. The move aimed to get rid of most of its unsold units at the 121-unit property.
“Time is the worst enemy,” Shlomi Reuveni, president of Reuveni Real Estate, the brokerage that marketed Charlie West to buyers before the bulk sale (which his firm was not involved in), told the publication. “There’s a strong pipeline that’s coming, and that has to be contended with. Brand new projects that open up might be more attractive to buyers.”

For others, like HFZ’s The XI, defaults and litigation has already arrived.
“There’s going to be foreclosures, there’s going to be restructures, note sales, it’s all coming,” Brett Siegel, vice chairman for New York capital markets at Newmark Knight Frank, told Bloomberg. “Lenders are starting to realize they have to go back to their business of making loans. They can’t just be in the business of giving forbearance forever.”
 

David Goldsmith

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A little more than a year after kicking off marketing at 196 Orchard St with a controversial video, it looks like Serhant has lost the project to Corcoran Marketing, the third team on this development.
 
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