The Real DealJanuary 01, 2014With the New Year underway, it’s time for a post-mortem on last year’s residential market. And in an unusual twist, industry insiders who normally rely on statistics to understand the ins-and-outs of the market are saying that it’s best to avoid the numbers when gauging how the uppermost echelon did in 2013.
That’s because while the luxury market got all the buzz last year, some of the numbers tell a different story.
Indeed, 2013’s top five Manhattan residential deals totaled $162.13 million, a 47 percent drop from 2012’s $306.5 million. In addition, the highs weren’t so high: the most expensive closed sale was the $42 million purchase of a sponsor unit at 18 Gramercy Park, compared with the $88 million sale of financier Sanford Weill’s apartment at 15 Central Park West in 2012.
Considering this data, it may seem as though the residential market took a dip last year.
However, most of the year’s priciest sales — including a transaction reportedly in excess of $90 million — won’t actually close until well into 2014, brokers told The Real Deal.
Those deals are expected to break records.
The reason that they’re slow to hit the tape? Those priciest deals are predominantly in new-development condominiums in which closings have not yet begun. So, with the exception of the $42 million deal, most of 2013’s top deals were resales, which are traditionally less pricey than brand-new product, or condominiums that hit the market in 2012.
It is also symptomatic of the lack of available high-end properties, brokers said.
“I would have to assume that the [drop in the numbers] is a function of available inventory and does not necessarily represent a shift in buyer motivation or an exhaustion of the buyer pool,” said Tim Crowley, a broker with Flank Brokerage, the brokerage arm of the development and architecture firm by the same name, who sold the third priciest deal of the year. “There have been contracts signed this year in mega Midtown projects like One57 [at 157 West 57th Street] and 432 Park Avenue that prove this point.”
Those Midtown contracts, which are set to close this year and into 2015, will provide the true and final accounting of how well the market performed in both 2012 and 2013, Crowley noted. (Some of the pending sales at One57 went into contract in 2012.)
Still, not everyone is confident that the demand for units priced above $5,000 per square foot, the norm at towers like One57 and 432 Park Avenue, will continue at the level needed to absorb the supply. Indeed, developers, encouraged by the appetite for those units in the last two years, have brought more of those high-priced residences to market in the last year than in recent memory. Despite the overall inventory shortage, there were nearly twice as many units that came to market asking above $5,000 a foot in 2013 than in 2012, according to data from CityRealty.
“Developers are using One57 and 432 Park as benchmarks for 2014, but it’s difficult to know how deep that market is,” said Emily Beare, a luxury broker at CORE. “One building in a neighborhood does not necessarily make a market.”
Beare, whose $70 million listing at 15 Central Park West was taken off the market in the fall, noted that the $88 million sale last year at 15 Central Park West, the record-setting condo project developed by Arthur and William Lie Zeckendorf, had created an irrational frenzy in the market.
“Once sellers realized that the sale did not truly reflect the market, prices [for comparable listings] came down as much as 25 percent. The sale was an example of the right buyer at the right time,” she said.
But while 2013’s top five closed deals maybe not have matched the deals that went into contract the prior year, they were not shabby, either.
Read on for a closer look at which units made the cut.