Lagging at the top of the market

The Real DealApril 01, 2015

With a handful of record sales in the past year, there’s no question Manhattan real estate has entered a new stratosphere. But even as asking prices at the very top of the market are shooting up, the city’s priciest closed sales have lagged by comparison.

 

Last year’s top sale — the record-breaking $100.5 million penthouse at Extell Development’s One57 — was eclipsed on the listings side by a $118 million three-unit combination unit at the Ritz-Carlton in Battery Park City. In 2013, there was a similar gap between the priciest sale of the year and the priciest listing. The $42 million penthouse sale at 18 Gramercy Park South was a stunning 58 percent less expensive than the $100 million penthouse listed at CitySpire.

 

Shaun Osher, CEO of the brokerage Core, said the spread is “typical in a market that’s moving upwards,” as owners and developers, especially at the highest echelon of the market, test the waters to see how high they can push prices. He pointed out that the majority of luxury new development units are selling at their asking prices.

 

In fact, Douglas Elliman’s Toni Haber said one reason for the disconnect between listing price and sales price is that some of the priciest pads that closed in 2014 and 2015 actually went into contract two or three years ago. In other words, today’s closed sales are more an indication of the market two years ago.

 

For example, the $100.5 million One57 penthouse went into contract in February 2012 and closed in December 2014. Meanwhile, the $42 million penthouse at 18 Gramercy Park South went into contract in September 2012 and closed in August 2013.

 

Haber said the penthouse at 15 Central Park West that sold three years ago in December 2011 for $88 million would command north of $100 million today. “The market has dramatically gone up,” she said.

 

By that logic, the tide may be turning: This year’s top sale, as of mid-March, was billionaire Len Blavatnik’s $77 million co-op at 834 Fifth Avenue. That bested this year’s most expensive new listing, the Puck Building’s top penthouse, which is asking $66 million. However, there are pricier listings coming down the pike, including the $130 million penthouse at Zeckendorf Development’s 520 Park Avenue, the $150 million penthouse at the former Sony building at 550 Madison Avenue, and a possible $175 million listing at 220 Central Park South. 

 

To be sure, there is a concentration of pricey listings at the top of the market. The top 25 sales in 2014 exceeded $1 billion, compared with $599.7 million in 2013 and $836.5 million in 2012, according to an analysis conducted by The Real Deal of data from the listings website StreetEasy. And last year’s top 25 sales all exceeded $30 million, a notable jump from 2013, when only nine of the most expensive sales reached that price.

 

Still, price chops are getting larger at the top of the market.

 

The Pierre Hotel’s penthouse, originally listed at $125 million, saw a 50 percent price chop when it was relisted this year for $63 million. Meanwhile, billionaire Steven Cohen, founder of hedge fund SAC Capital Advisors, slashed the price of his One Beacon Court pad to $82 million from $110 million.

 

A number of the priciest sales in the past few years also sold for less than their asking prices, albeit still at stratospheric amounts. Despite its record-breaking $100.5 million price, One57’s penthouse was originally asking $115 million, while a full-floor condo at the Sherry-Netherland fetched $70 million in 2014 — after asking $95 million.

 

Similarly, the penthouse at the Carlton House, at 21 East 61st Street, was initially priced at $65 million but sold for at a 20 percent discount of $52 million last year.

 

Andy Gerringer, managing director of the Marketing Directors, said only a select few properties warrant record-setting numbers. 

 

Big numbers “certainly will get you attention,” he said. “But do you have a Plan B in case it doesn’t happen?”

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