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Predicting 2014: Pros weigh in on everything from de Blasio to prices, but agree that market can’t keep up with last year’s pace

The Real DealJanuary 01, 2014
Sure, nobody knows what’s actually going to happen in the New York City residential real estate market in the New Year. But it’s still fun to guess.

In this month’s Q&A, The Real Deal asked residential brokerage heads, market analysts and developers to give us their best educated guesses on everything from residential pricing to how the beginning of Mayor Bill de Blasio’s term in City Hall will impact the market.

Most seemed to be in agreement on at least one thing: the 2014 market will not be able to sustain the pace of the 2013 market. But, they said, that’s more a function of the record-setting pace of nearly every metric in 2013 than it is of the coming year.

“It’s unrealistic to expect deal volume to compete with what we just experienced, so I would lower my expectations on the future pace of contract activity and ultimately price action for 2014,” said Noah Rosenblatt, the founder of brokerage and research platform UrbanDigs.

While Rosenblatt and others said a shortage of inventory will continue into the New Year and will lift prices, some said buyers have hit their limit on price increases. That’s partly because much of the inventory that is coming on the market is being “posited toward the ultra-luxury buyer,” said Core CEO Shaun Osher, who noted that the “affordable luxury” sector —between $1.5 million and $3 million — is still seeing a void of quality product. He said anything listed in that price range this year will do well.

In addition, several sources said they didn’t expect de Blasio’s first year in office to impact market conditions immediately, partly because it will be hard for him to get anything passed in Albany because of the state elections this year. But they said, depending on what the new mayor does this year, his presence could impact the pipeline of residential product more long-term.

For more on which areas of the city are expected to do best and worst, what developers are looking out for, and what to anticipate in terms of a residential bubble, we turn to our panel of experts.

A Drop at the Top: 2013’s priciest closed residential deals pale in comparison to 2012’s biggest sales

The Real DealJanuary 01, 2014
With 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.

Time for Change

Luxury Listings NYCJanuary 01, 2014
Last year was a historic one for New York City real estate, with price records shattered and the luxury market on fire.

Hedge funder Bill Ackman and a group of investors reportedly paid more than $90 million for a unit at Extell Development’s luxury condo tower One57. If the sale closes at that price, it will set a record for the most expensive Manhattan condominium.

With a new mayor and a slew of luxury condos coming to the market, what can we expect this year? Read on for a look at some key issues.

Interest rate jitters

Speculation that the Federal Reserve could begin to wind down its signature easy-money program has renewed buyers’ sense of urgency to take advantage of historically low rates before the cost of borrowing shoots up.

The interest rate for a 30-year fixed-rate loan is currently hovering around 4.6 percent, but experts predict rates could reach as high as 6 percent this year.

Over the past few months, there’s been an uptick in buying—which was already going strong, despite the relative lack of inventory—as interest rates have inched up, said Jordan Roth, a senior branch manager at GFI Mortgage Bankers, a residential mortgage provider in Manhattan.

“If rates had stayed where they were in the first part of 2013, buyers might have stayed on the sidelines,” he said. “Now, we’re seeing people get into the game.”

The de Blasio agenda

Many people are watching to see which of Mayor de Blasio’s real estate-related issues he raised on the campaign trail gets tackled first.

More affordable housing is likely on the way: On the mayor’s agenda is mandatory inclusionary zoning, which would change the rules on affordable housing for developers.

At the moment, many residential projects are planned as 80/20 buildings—a program through which developers receive tax-exempt financing in exchange for making 20 percent of their units affordable—though de Blasio may change that ratio for new residential developments.

The condo concern

Luxury super-towers One57 and 432 Park Avenue hogged headlines last year. Now we’ll see if the batch of high-end projects conceived in the wake of those two high-profile condos can survive.
“Developers are looking at those projects as benchmarks, but they’re on a different playing field,” said Shaun Osher, CEO of real estate brokerage CORE, who predicts that new units coming to market with exaggerated price tags will linger. “Buyers are not going to be foolish.”

Among the most anticipated projects set to go up in Midtown is JDS’ so-called “skinny” tower at 107 West 57th Street, which is slated to rise to 1,350 feet, and the 1,423-foot glassy skyscraper Extell is building at 225 West 57th Street.

The renewal of Seward Park

Big changes are coming to the Lower East Side, which will see a 1.65-million-square-foot, mixed-use project in and around Seward Park, slightly north of East Broadway.

The six-acre site is the largest swath of undeveloped city-owned land in Manhattan below 96th Street.

The project will include 1,000 units of housing (half of which must be permanently affordable) as well as a 15,000-square-foot open space, a school, a community center, 250,000 square feet of office property and a mix of retail spaces.

“Smart people are buying in the area before this is built,” said Stephen Kliegerman, president of Halstead Property Development Marketing. “This is potentially the most exciting mass new development to happen in the city. You’re going to see values in that area jump by 50 percent over the next five years.”

Other large-scale projects to watch: South Street Seaport, the World Trade Center site and Hudson Yards, which is rising on the far West Side.

Aiming High

Luxury Listings NYCJanuary 01, 2014
Basketballer Paul Pierce scored a full-floor loft at Franklin tower, at 90 Franklin Street. The 5,000-square-foot rental—with four bedrooms and a wood-burning fireplace—was asking $35,000 per month. The building is also home to Mariah Carey, who owns the penthouse.

NYC's Premier Properties: 131 West 24th Street, #5/6

Luxury Listings NYCJanuary 01, 2014
131 West 24th Street, #5/6 in Chelsea - $5,000,000

Co-op: 12 rooms, 5 beds, 3 baths | Amenities: Pets Allowed, Storage Available, Hot Tub
Maintenance: $1,300 | Listing ID: S1052972

Magnificent 4,200 square foot duplex loft now available. The home's flexible layout is currently configured with five bedrooms. Listed at CORE by the Patrick Lilly Team, 212-612-9681, patricklillyteam@corenyc.com.

Put it to Use in New York

Leverage LookbookJanuary 01, 2014
"New York is a true melting pot of culinary, cultural, financial, social and creative people, where the cream can rise to the top! The dining scene here is particularly special, and because of the abundance and convenience of incredible restaurants in New York, most people eat out. However, lately, I've started to see a trend in more people actually using their kitchens for functional purposes rather than just looking at them like a piece of furniture." --Shaun Osher, CORE

Razzle Dazzle: Colin Cowie's Manhattan Marvel

Leverage LookbookJanuary 01, 2014
"It reeks of chic," says event planner to the stars Colin Cowie, of the duplex penthouse he has put on the market for $5.75 million. The 15-story modern edifice of limestone and gray brick -- named The Emory and located in Manhattan's historic Flatiron district -- is by Morris Adjmi Architects. Cowie closed on the top two units in 2009 and proceeded to customize the resulting nearly 3,000-square-foot space into a glamorous couture haven where he could host his legendary parties. The apartment, available with furnishings for an additional sum, is awash in materials and surfaces that emanate shimmer and shine.

Money Talker

Fox BusinessDecember 27, 2013
The Wall Street Journal’s Veronica Dagher, Jarrod Guy Randolph and communications expert Rachel D’Alto on the impact of work on one’s health.

2013 Was Great for NYC Condos — But Can it Last?

The Real DealDecember 27, 2013
While this year has been hailed as having a near-perfect confluence of factors driving New York City residential real estate, some industry leaders are predicting it could pass.
Rising demand for sparse Manhattan condominiums combined with a no-holds-barred attitude towards luxury development has shattered records, with the average contract price exploding 60 percent in the third quarter of 2013 to a record $3.43 million, according to the Corcoran Sunshine Marketing Group.

Meanwhile, the number of new units coming online in Manhattan is still below the average, according to Corcoran Sunshine. In 2013, 49 residential buildings with a total of 2,269 units opened in Manhattan, south of Harlem, compared to 30 buildings with 1,309 units in the previous year, Corcoran Sunshine said.

And a rise in building permit applications, to 3,339 filed in the first 10 months of this year, up from 2,328 in all of 2012, has the market looking up since the days of 2010.
Not surprisingly, new condos are getting scooped up. For example, at least 90 percent of the 125-unit NoMad condos at 10 Madison Square West are under contract, and the 66-unit Leonard at 101 Leonard Street in Tribeca was 80 percent sold two months after opening, the New York Times reported.

However not everyone thinks the flurry of new development is a good thing. Shaun Osher, CEO of real estate brokerage CORE, voiced concerns to the Times that the pool of buyers may not be deep enough to snap up high-end condos that lack value.

“Buyers are not going to be irrational in their purchases,” Osher told the Times. “I think there will be a pushback to price-per-square-foot numbers that don’t meet the quality or location of the product.”

In 2013, the High End Ruled

The New York TimesDecember 27, 2013
Rising demand and a record shortage of apartment listings set the stage for a seller’s market in 2013. But new development stole the spotlight.

After a four-year dry spell, a crop of new luxury condominiums aimed at the superrich opened in Manhattan and were snapped up faster and at prices surpassing those attained before the recession.

The total number of new development contracts jumped 20 percent, to 1,847, through the third quarter of 2013, compared with the same period last year, as wealthy buyers rushed to sign contracts for apartments still in the construction phase, according to the Corcoran Sunshine Marketing Group.

For the same period the average contract price surged nearly 60 percent, to a record $3.43 million from $2.16 million, surpassing the previous new-development high of $2.21 million in the third quarter of 2008. And the pace of sales was rapid-fire, underscoring the strength of demand for Manhattan condos built for the upper echelons.

“Newly introduced development absorbed far faster than anyone could have predicted,” said Kelly Kennedy Mack, the president of Corcoran Sunshine Marketing Group. “Extremely compelling properties, limited supply and a hungry pool of both domestic and international buyers drove rapid sales.”

Just 49 residential buildings opened in Manhattan in 2013, not counting Harlem and Upper Manhattan, with a total of 2,269 units, according to Corcoran Sunshine. That’s more than the 1,309 units across 30 buildings that came to market last year. But it’s still below historical averages of about 3,000 units normally required to meet demand, Corcoran Sunshine found. During the boom of 2007, 8,052 new units were listed.

Developers focused on ultra-high-end condos with every conceivable amenity to justify the expense of building amid surging land costs. In early December there were 256 listings for less than $2 million in new condo developments, down from more than 2,000 at the end of 2008. By contrast, there were 458 for more than $2 million, down from 1,129 about five years ago.

In many cases, prices met or exceeded expectations, particularly in the downtown market, where about 260 deals over $7 million took place, compared with 80 in 2012, with the majority in new developments.

Among the most talked-about buildings was 56 Leonard, a 145-unit TriBeCa tower by Alexico Group and Hines that was shelved during the recession, only to open to enormous interest earlier this year. More than 90 percent of its units were sold within nine months, at an average price of $3,200 a square foot.

In June, a penthouse at 56 Leonard went into contract for $47 million, a new high for a condo sale downtown. But it was soon outdone by a $50-million-plus penthouse atop Walker Tower, a newly converted luxury condominium in Chelsea.

Stories abounded of condos flying off the shelves. A luxury condominium developed by the Witkoff Group in the West Village, 150 Charles Street, had found buyers for all 91 luxury apartments just six weeks after sales opened in February. The average price was $3,400 a square foot, according to Susan M. de França, the president of Douglas Elliman Development Marketing, which handled the sales.

“We had a list of hundreds of individuals that were waiting for the property to be launched,” Ms. de França said. “We never even featured an advertisement.”

In NoMad, another Witkoff project, 10 Madison Square West, a 125-unit condominium conversion, had similar success, with nearly 90 percent of its one- to five-bedroom residences in contract within five months of opening sales in July. That included the penthouse, which was never officially listed but went into contract for about $36.5 million in under 90 days.

In TriBeCa, the Leonard, a 66-unit condo conversion at 101 Leonard Street by Bizzi & Partners Development, was more than 80 percent sold within two months of its July opening. Just three units are left, including a three-bedroom for about $3 million and a four-bedroom penthouse with a private rooftop terrace for $7.5 million.

The Jefferson, a project by CBSK Ironstate, was the only condo to open in the East Village this year. Its 82 units were priced from $795,000 to $3.595 million; the final contract was signed earlier this month.

The frenetic sales activity wasn’t limited to downtown. Sales began earlier this year at 432 Park Avenue, a Midtown luxury condominium developed by CIM Group and Macklowe Properties. When completed in 2015, it will be the tallest residential building in the Western Hemisphere. Half of its 104 units are in contract, for roughly $1 billion in potential sales, including a $95 million penthouse that will set a price record if it closes.

On the Upper West Side, the sales campaign at 101 West 87 Street, a 62-unit condominium by Bazbaz Development that opened in January, lasted just seven and half months, with the $7.6 million penthouse among the first units to go.

One Riverside Park, an Extell Development project overlooking the Hudson at 50 Riverside Boulevard, opened sales last month. Already half of the 219 units are in contract.

Although new development started its comeback in 2012, with sales velocity and prices rising in a market starved for fresh inventory, the pace only accelerated in 2013. “It wasn’t until this year when we saw new development was achieving success on such a widespread scale,” said Ms. Mack of Corcoran Sunshine. “New development was not only really back, but performing at a level not seen before.”

How long the frenzy can continue is anyone’s guess. Too many high-end units coming to market at the same time could lead to a softening. “Buyers are not going to be irrational in their purchases,” said Shaun Osher, the chief executive of the brokerage firm CORE in Manhattan. “I think there will be a pushback to price-per-square-foot numbers that don’t meet the quality or location of the product.”

Building permits for new developments are on the rise. Permits were filed for 3,399 units in Manhattan through the first 10 months of the year, as opposed to 2,328 for all of last year, according to the latest census figures.

The outlook has certainly improved since 2010, when Manhattan permits were filed for just 704 units, amid a lack of financing that squelched further growth. Yet even if all the permits filed for Manhattan this year were to translate into new units, said Gregory J. Heym, the chief economist at Brown Harris Stevens and Halstead Property, “you would still have what would be considered a neutral market.”
“This pipeline,” he said, “it can’t come fast enough.”

The Big Ticket

The pricing of resale apartments and townhouses clung to the stratosphere in 2013, and the luxury market was active, but most buyers did not let trophy properties entice them into sticker-shock territory.

The handful of residences priced for resale above $100 million, along with those priced above $50 million, lingered unsold as of mid-December, according to city records.

The most expensive sale to close this year was for $43 million: a former shoe warehouse at 144 Duane Street in TriBeCa. Built as a department store in 1862 and now destined to become a posh 21st-century family compound, it clocked in at $45 million less than the record-shattering $88 million paid last year for Sanford I. Weill’s penthouse at 15 Central Park West. It was also $7 million behind the 2012 runner-up, an 11th-floor co-op with 70 feet of Central Park frontage at 944 Fifth Avenue that sold at year’s end for its full $50 million asking price.

But the sale of 144 Duane Street, a historic limestone building that hit the market in 2011 for $45 million — and climbed to $49.5 million in 2012 — did establish, albeit temporarily, a downtown record. Tricked out with 23,100 square feet of residential space, including a triplex penthouse and a basement basketball court, it nudged just ahead of the pristine $42 million duplex penthouse at 18 Gramercy Park South for which Leslie Alexander, the billionaire owner of the Houston Rockets basketball team, paid the full asking price.
The lavishly appointed 6,300-square-foot PH17 on the 17th and 18th floors has four terraces and a heated infinity pool among its amenities.

There was no lack of variety at the top: the year’s third-most-expensive resale, at $34.35 million, was the Ellen Shipman Biddle house at 21 Beekman Place, an appealing century-old Turtle Bay townhouse named for the renowned landscape architect who lived there from 1919 to 1946.

The elegant brick house, restored in 2008 and priced at $48.5 million in 2012, set a record for a 20-foot-wide townhouse ($4,754 per square foot) when it was bought last summer by the State of Qatar, presumably as a diplomatic residence.

The restoration-ready Walter N. Rothschild Mansion at 41 East 70th Street finished in fourth place at $32 million, and a chic combination that created an 8,500-square-foot triplex penthouse at the Abingdon, at 320 West 12th Street, rounded out an eclectic Top 5 of closed sales at $29.78 million.

“I look at 2013 as a bit of an anomaly,” said Jonathan J. Miller, the president of the appraisal firm Miller Samuel. “All of the year’s records set by property type — co-op, condo and townhouse — were actually lower than last year’s records, yet the luxury market has not weakened. There is a randomness to pricing at the very top, and aside from trophy sales, price trends for the overall market were fairly mundane over the year, despite record low inventory.”

Two of the most prolific new developments were luxury reinterpretations of downtown antiques: 18 Gramercy Park closed 10 of its 16 spacious prewar-themed residences for an aggregate return of just over $187 million ($4,208 per square foot) for the sponsors, Zeckendorf Development and Global Holdings. In Chelsea, the sponsors of Walker Tower at 212 West 18th Street, JDS Development Group and the Property Markets Group, announced 22 closed sales, with three more scheduled before the end of the year, for a total of $226,904,290 (this does not include its most expensive units, a pair of penthouses for $55 million and $47.5 million).

Although 2013 was not a year of blockbuster closings, big money was in motion — a flurry of contractual commitments for extraordinarily expensive condos in as-yet unfinished luxury developments. Downtown at 56 Leonard Street, Penthouse 60, at the jagged pinnacle of the building, is in contract for $47 million; PH1 at Walker Tower is in contract just under its rather bold $55 million asking price and poised to break the downtown record upon closure.

In Midtown, where Central Park views authorize premium price points, 432 Park Avenue announced the signing of a $95 million contract for the top-floor penthouse, and at Extell Development’s juggernaut tower, One57, more than 10 condos priced above $45 million are under contract, two for more than $90 million. One57 is more than 70 percent sold, with total projected sales exceeding $2 billion.
At that rate, One57 appears to be positioning itself as next year’s “It” development. And if the avalanche of trophy contracts signed all over town in 2013 translate into closed sales, 2014 may well earn the sobriquet of the year of the splurge.

ROBIN FINN

Landmarks

The seemingly endless debate about whether a landmark designation hurts real estate values continued bubbling in 2013, even as the New York City Landmarks Preservation Commission designated two new districts and one extension in the fiscal year ending in June, and began preparing to celebrate the 50th anniversary of the city’s landmarks law starting in 2015.

In the fiscal year that ended in June, the commission approved the East Village/Lower East Side Historic District; the West End-Collegiate Historic District Extension, roughly along West End Avenue between 70th and 79th Streets; and the Bedford-Stuyvesant/Expanded Stuyvesant Heights Historic District in Brooklyn. In the current fiscal year, the commission is to vote on the Harrison Street Historic District on Staten Island and the Central Ridgewood Historic District in Queens. The South Village Historic District, a 13-block area north of West Houston Street, was approved unanimously on Dec. 17.

Public hearings have been held on the Riverside-West End Historic District Extension II; the Crown Heights North III Historic District in Brooklyn and the Bedford Historic District, also in Brooklyn; and the Douglaston Historic District Extension in Queens.

The Real Estate Board of New York, known by its acronym Rebny, continued to be vocal in citing the downsides of historic designation.
In a June report, Rebny stated that more than one in four properties in Manhattan are protected as landmarks, and argued that designation as a historic district “effectively prohibits the full development potential of underdeveloped sites.” The report also stated that “there are numerous cases where properties with no historic value like vacant lots, parking lots and gas stations are included in the designation of a historic district.”

“There are many occasions when we’ve been supportive of landmark designation,” said Michael Slattery, Rebny’s senior vice president for research. “For example, the extension of the Park Slope District and the area in Chelsea where the Underground Railroad was. Where the process breaks down is when the quality of buildings is not up to standards — for example, when a district includes too many no-style buildings.”

In response, Elisabeth de Bourbon, the commission’s director of communications, said: “What critics don’t take into account are issues like neighborhood stability and neighborhood pride. Those sorts of benefits cannot be measured.”

Mitchell Moss, a professor of urban policy and planning at New York University, says both viewpoints have certain merits.
“On the one hand,” Professor Moss said, “some protected areas, like the proposed South Village extension, are of questionable historical identity. On the other hand, in many protected areas, landmarking has not been an impediment to development. Designation hasn’t stopped development in NoHo or West Chelsea. In many areas, landmarking has encouraged intelligent development. Dumbo is one of the great successes of landmarking.”

Ingrid Gould Ellen, the director of the urban planning program at the Robert F. Wagner Graduate School of Public Service at New York University and a director of the Furman Center for Real Estate and Urban Policy at New York University, points out that the Rebny reports study only Manhattan. “Both camps are focused on Manhattan,” said Professor Ellen, noting that designation might have a very different impact in Manhattan than on the rest of the city. In addition, she said, “the challenge for any study of historic district designation is that it’s always difficult to know what would have happened in the absence of a designation.”

The goal, in her view, should be a broader conversation about land use. “We need to balance the goal of increasing new construction and that of preserving the city’s cultural heritage,” she said.

CONSTANCE ROSENBLUM

CORE - Another Record at One Museum Mile

Real Estate WeeklyDecember 26, 2013
One Museum Mile, the new residential condominium at 1280 Fifth Avenue on Central Park in Manhattan, has reached 90 percent closed and in contract.

The development has closed 33 sales in the past six months totaling more than $65 million, announced CORE, the exclusive sales and marketing firm for the building.

Recent sales include a three-bedroom that closed for $3.745 million or $2,133 psf, the highest price per square foot ever achieved for an apartment in the neighborhood.

The sale broke the previous record held by another three-bedroom apartment at One Museum Mile, which sold for $2,030 psf.

“This milestone is as much a testament to this exquisite Robert A.M. Stern building as it is to the transformation of perception. At the top of Central Park, this is one of the most beautiful neighborhoods in the city,” said Tom Postilio, CORE’s director of sales for One Museum Mile.

“We have again toppled our previous record pricing. This neighborhood is not emerging — it is blossoming.”

Among the remaining units are a one-bedroom, 1,200 s/f unit with private terrace offered at $1.395 million. Two-bedrooms with Central Park views start at $1.725 million, and three-bedroom homes start at $1.895 million.

Home Staging Effect? Not Much.

The Wall Street JournalDecember 26, 2013
How much does a tacky purple wall color affect a home's sale price? Not much, according to new research on home staging.
While good staging does influence a home buyer's overall impression of a house, staging alone doesn't result in buyers willing to pay more for the house, says Michael Seiler, professor of real estate and finance at the College of William and Mary, who researched how home buyers responded to six house tours that varied in paint color and furniture quality.

His findings show that buyers are willing to pay roughly $204,000 in each of the house examples, regardless of the quality of furnishings or paint color. However, the research subjects believed that other buyers would adjust their pricing based on how the house is staged.
"We were able to parse out what you consciously believe and subconsciously believe," Mr. Seiler says. "Beforehand, everyone thinks poor staging is going to be a problem. But when we actually did the experiment, we found it doesn't matter."

Mr. Seiler and co-authors Mark Lane of Old Dominion University and Vicky Seiler of Johns Hopkins University led 820 home-buyers through one of six virtual house tours in March 2012. Using professional-grade rendering software created by an architecture firm in Virginia Beach, Va., each house featured either a "neutral" beige wall color or an "unattractive" purple paint color, and "good" furniture, "ugly" furniture or no furniture. The neutral and attractive options were chosen to appeal to the greatest number of people, Mr. Seiler says.

The home buyers then reported what they would be willing to pay, as well as their overall impression of the house.

Still, Mr. Seiler warns: "All we could test is how much the home would sell for. What we don't know is whether a well-staged home will sell faster. It may sell quicker."

The study, "The Impact of Staging Conditions on Residential Real Estate Demand," has been accepted by the Journal of Housing Research for publication sometime next year, he said.

It may be hard to persuade real-estate professionals of the findings.

Doug Eichman, a real-estate agent with Core in New York City, spent more than $30,000 to stage a Midtown East penthouse co-op listed for $6.995 million. His stager, Cheryl Eisen, president of New York City-based Interior Marketing Group Inc., says staging works when buyers feel emotionally connected to the house.

"The bare-bones reason for staging initially is to show buyers how they can function in a space," Ms. Eisen says. "When you go over the top, you make them have an emotional reaction to the space. If they fall in love with the space, they will be willing to pay for it."

Darci Willis, a real-estate agent with Century 21 Scheetz in Carmel, Ind., says that when potential buyers are on the fence, a well-staged home may be a deciding factor.

"Even though people logically know that they can change the paint color, it can be distracting and off

El Barrio’s Journey from Boho to Bourgeois

New York PostDecember 24, 2013
As noted real estate hand Bill Shakespeare once asked, “What’s in a name?”

If you’re trying to sell high-end condos in East Harlem, quite a lot, apparently. In early 2012, luxury development 1280 Fifth Avenue was dead in the water — despite a Robert A.M. Stern design and a location right on Central Park. The building also boasts some impressive cultural bona fides thanks to the New Africa Center, now in development on the tower’s first four floors. Nonetheless, two years after launching, 1280 Fifth had closed on only three of its 113 units.

Seeking to right the ship, developer Brickman decided on a “reset” — bringing in real estate marketing outfit CORE to launch a new sales effort. Taking stock of the building’s travails, the firm decided that what was needed was “an identity” says Tom Postilio, CORE’s director of sales. “People weren’t really aware of it. It wasn’t really on the map the way it needed to be,” he says. And so a name change was in order — from 1280 Fifth Avenue to One Museum Mile. It was a move, Postilio says, “that looking back at now, we really feel was a game changer.”

Since then, the development has gone gangbusters, setting a neighborhood record with prices topping $2,000 per square foot. Earlier this month, it reached 90 percent sold, having in the last six months notched 33 closings totaling more than $65 million.

Maybe it was just a matter of time for East Harlem — a traditionally Latino ‘hood roughly running from East 96th Street to East 125th Street; and from Fifth Avenue to the East River. A hotbed of development during the last housing boom, East Harlem “was hit very severely by the [2008] crisis,” says Corcoran broker Fabienne Lecole. In 2008 the nabe’s price per square foot was at $714, but then declined to $626 in 2009, and went to $545 per square foot in 2011, according to CityRealty.

But, driven by new luxury buildings like One Museum Mile and 1212 Fifth Avenue, a 55-unit condo from Durst Fetner Residential that has also drawn prices in excess of $1,000 per square foot, “slowly and gradually we are seeing a nice recovery,” says Lecole. Artisan shops like Beurre & Sel opened at La Marqueta, the market at 115th and Park Avenue. ABV, a wine bar, is a neighborhood hit at Lexington Avenue and 97th Street.

Julie Tucker, global business director at advertising firm JWT, closed on two units at One Museum Mile at the beginning of the year after a search that took her all across the city. “I looked at The Dylan in Hell’s Kitchen, brownstones up on 125th Street, a lot of rental places, and then I saw [One Museum Mile] and it was just gorgeous,” she says. Given their three young children, she and her husband were particularly attracted to the development’s amenities like a pool and playroom, and, most important, its proximity to Central Park. They’ve since combined their two apartments into one 2,300 square foot abode.

It’s not just a matter of the high end of the market, though — a number of more modest projects are contributing to the neighborhood’s real estate revival, as well. Developer HAP Investments, for instance, currently has four buildings planned for the area: HAP 1, an 8-unit rental at 419 East 117th St; HAP 2, a 30-unit rental at 2338 2nd Ave.; HAP 5, a 20-unit condo building at 329 Pleasant Ave.; and HAP 6, a 20-unit condo at 1653-1655 Madison Ave.

Prices on the rental side range from $1,750 for studios to $6,000 for a two-bedroom penthouse, and condos start at $450,000 for studios and going up to $1 million for two-bedrooms. The numbers suggest that HAP’s developments — and East Harlem more generally — offer more reasonably-priced options for buyers who might find themselves edged out of other Manhattan neighborhoods, says HAP CEO Eran Polack.

“It’s a nice alternative to the Upper West Side, the Upper East Side, places that are much more expensive these days,” he says.
And while East Harlem prices are still relatively affordable now, they aren’t exactly holding steady. This year’s going rate of $716 per square foot represents a 21 percent jump from $592 per square foot (with sales at One Museum Mile and 1212 Fifth Avenue subtracted) for the neighborhood from 2012. By way of comparison, price per square foot for all of Manhattan rose 8 percent, from $1,251 to $1,347.

These moderate prices, however, don’t mean a lack of pizzazz, Polack says, noting that he and other developers are bringing world-class architecture to the area. His HAP 5 building, for instance, comes designed by renowned architect and designer Karim Rashid.

Blumenfeld Development, meanwhile, hired Copenhagen-founded architecture firm the Bjarke Ingels Group to design a 200-plus-unit residential tower it’s putting up on East 125th Street. And last week, a trio of buildings along Park Avenue between 124th and 125th Streets were sold to New York-based investment firm Waterbridge Capital for almost $37 million. The buyer plans to convert the spaces into a mixed-use retail and condominium complex — which will stand directly across from a similar development slated to rise at 1800 Park Avenue.

All of the new projects are clearly having an effect. “There’s gentrification is going on. There are new restaurants, new supermarkets. I see young professionals coming into the area,” says Jorge Durand, who arrived in East Harlem from Hamilton Heights in the summer of 2011.

Last May, Durand moved to a one-bedroom in the La Celia co-op building at 64 East 111th St., lured there, like Tucker, in no small part by its proximity to Central Park. A runner, Durand actually discovered the building on a jaunt through the park. “It was like an accident,” says Durand, a scientific strategist in medical advertising. “I was running one day and on my way back to my [old] apartment, I saw this building under construction.” Beyond the greenery, Durand also cites a growing Lexington Avenue gallery scene and restaurants like Third Avenue’s Amor Cubano as key to the area’s appeal.

Tucker, too, has come to appreciate East Harlem’s culinary offerings. Recently, she discovered bakery La Tropizienne, a local institution at First Avenue and 110th Street. “It’s just the most amazing little French cafe,” she says.

On the downside, she notes, East Harlem still lacks some of the more pedestrian amenities other spots take for granted. For instance, she says, “I would love to have a pharmacy closer by.” Bottom line, though, Tucker says, “I love it. I have a Fifth Avenue address, and my house overlooks Central Park.”

When she puts it that way, it does sound pretty nice.

Foreign Buyers Are Starting To Choose Brownstones Over Luxury Condos

Houston ChronicleDecember 20, 2013
As more and more super-pricey luxury condo buildings rise above New York City, international buyers are bucking the trend and purchasing historic townhouses instead.

According The Wall Street Journal's Candace Taylor, more and more foreigners are looking into buying brownstones as secondary residences, opting out of the condos that have long been popular for this particular group.

Townhouses, many of which were built in the late 19th and early 20th century, can be difficult to maintain, and they don't have the services that make living in a doorman building is so convenient.

However, there are some unexpected benefits to living in a brownstone. As demand for luxury condos grows, housing boards for those buildings have begun investigating potential buyers' financial background more than ever before. The privacy of a townhouse would be much more attractive to Europeans or other foreigners who are not accustomed to disclosing their finances.

"More and more, the tendency is to go toward a full townhouse purchase because they can be anonymous, and they can get all the space for a fraction of the price," Adie Kriegstein, an agent at CORE who recently represented a French family in the purchase of a townhouse on West 77th Street, said to the Wall Street Journal.

The numbers show that townhouses in Manhattan do tend to be slightly cheaper than luxury condos. For the third quarter of 2013, the average price per square foot for a townhouse was $1,144, compared to $1,379 for condos.

And the most expensive condos are much pricier than the most expensive townhouses — condos at 15 Central Park West average at $5,487 per square foot, compared to $2,440 per square foot at the Harkness Mansion on the Upper East side.

Plus, there are plenty of ways to create a full-service experience in a brownstone, from hiring a property manager to installing a virtual doorman.

All of the buzz surrounding townhouses is starting to spread to historic walk-up apartments as well.

Data from real estate consultants Miller Samuel showed that the number of walk-ups sold increased by 64% over the last year, a huge jump compared to the 22% increase for apartments in full-service doorman buildings.

"There is a new generation of renters out there who don’t need a doorman, and want something unique and different," Jordan Sachs, president of residential brokerage firm Bold New York, told The New York Times. "Walk-ups can offer a wonderful combination of old prewar New York mixed with new design, and that can be hard to find in a cookie-cutter doorman building."

Two Homes With In-House Recording Studios Hit the New York Market

The Hollywood ReporterDecember 20, 2013
Michael Feinstein’s Upper East Side townhouse and David Sanborn’s Upper West Side brownstone aim to hit real estate high notes.

Located on the Upper East Side, Michael Feinstein’s New York home is comprised of two townhouses that have been joined together as one. With a total of 18 rooms, the sprawling retreat includes twin staircases, six bedrooms, two kitchens, a gym, a meditation terrace, and an outdoor area that features a pair of pagodas that create an outdoor dining/living room. The home also includes a recording studio that listing agent Mickey Conlon refers to as “the ultimate sound laboratory. This is a high-functioning studio where Michael can digitalize all of his music into preservable formats.” Asking price: $17.9 million.

Over on the West Side, David Sanborn has his 1892 townhouse on the market for $12 million. The Grammy-award winning alto saxophonist dedicated an entire floor to a recording studio. “They soundproofed the space with leaded sheetrock,” said Conlon. “When they tested it, they let off firecrackers in the studio to make sure nothing could be heard on the other side of the walls.” The brownstone townhouse has four wood-burning fireplaces (one in the studio).

So does an in-house studio function as a help or a hindrance when selling an eight-figure property? “We’ve gone from pitching recording studios as something that can be converted into a media room to a true novelty that we’re finding people really want to embrace,” said Tom Postilio, who shares both listings with fellow CORE Group real estate agent Conlon. Together, the two star on HGTV’s Selling New York, and both notably have musical backgrounds: Postilio worked as a professional singer, performing the Great American Songbook in venues such as the Hollywood Bowl and New York’s Rainbow Room, while Conlon worked as a Broadway producer before turning to real estate.

“Maybe the most surprising factor is that people who are looking at these homes may not be musicians themselves,” said Conlon. “But having a recording studio taps into the garage band childhood fantasies. It’s like having world’s ultimate man cave.”

Uptown Developers Use Central Park Views to Lure Buyers

The Real DealDecember 20, 2013
Developers are looking to lure buyers further Uptown with a powerful carrot: Central Park views. And these come at a fraction of the cost of tony developments such as One57.

At One Morningside Park for example, a 2,160-square-foot space that was combined from three apartments sold for $2.74 million. The 22-story building offers views of both Morningside and Central Parks, as well as the Cathedral Church of St. John the Divine. Compare that to Gary Barnett’s One57, where the smallest three-bedroom available as of November was asking $18.75 million.

“The people who have bought here realize very quickly the value of this building,” Brown Harris Stevens’ Shlomi Reuveni, who is marketing the building, told the New York Times.
Other projects looking to tap into Central Park views are 111 Central Park North and the Robert A.M. Stern-designed One Museum Mile, where a three-bedroom condominium recently sold for just shy of $3 million, according to data from MNS Real Estate seen by the Times.

“We’re seeing high-rise development along Central Park North that has tremendous views, but yet you’re in neighborhoods that are not as expensive as those to the south,” Miller Samuel’s Jonathan Miller told the newspaper. Indeed, while the average sale price on the posher Upper West Side is north of $2 million, in Morningside Heights the average is $981,000, Miller Samuel data show.

Foreign Buyers Are Starting To Choose Brownstones Over Luxury Condos

SF GateDecember 20, 2013
As more and more super-pricey luxury condo buildings rise above New York City, international buyers are bucking the trend and purchasing historic townhouses instead.

According The Wall Street Journal's Candace Taylor, more and more foreigners are looking into buying brownstones as secondary residences, opting out of the condos that have long been popular for this particular group.

Townhouses, many of which were built in the late 19th and early 20th century, can be difficult to maintain, and they don't have the services that make living in a doorman building is so convenient.

However, there are some unexpected benefits to living in a brownstone. As demand for luxury condos grows, housing boards for those buildings have begun investigating potential buyers' financial background more than ever before. The privacy of a townhouse would be much more attractive to Europeans or other foreigners who are not accustomed to disclosing their finances.

"More and more, the tendency is to go toward a full townhouse purchase because they can be anonymous, and they can get all the space for a fraction of the price," Adie Kriegstein, an agent at CORE who recently represented a French family in the purchase of a townhouse on West 77th Street, said to the Wall Street Journal.

The numbers show that townhouses in Manhattan do tend to be slightly cheaper than luxury condos. For the third quarter of 2013, the average price per square foot for a townhouse was $1,144, compared to $1,379 for condos.

And the most expensive condos are much pricier than the most expensive townhouses — condos at 15 Central Park West average at $5,487 per square foot, compared to $2,440 per square foot at the Harkness Mansion on the Upper East side.

Plus, there are plenty of ways to create a full-service experience in a brownstone, from hiring a property manager to installing a virtual doorman.

All of the buzz surrounding townhouses is starting to spread to historic walk-up apartments as well.

Data from real estate consultants Miller Samuel showed that the number of walk-ups sold increased by 64% over the last year, a huge jump compared to the 22% increase for apartments in full-service doorman buildings.

"There is a new generation of renters out there who don’t need a doorman, and want something unique and different," Jordan Sachs, president of residential brokerage firm Bold New York, told The New York Times. "Walk-ups can offer a wonderful combination of old prewar New York mixed with new design, and that can be hard to find in a cookie-cutter doorman building."

Foreign Buyers Are Starting To Choose Brownstones Over Luxury Condos

Seattle PIDecember 20, 2013
As more and more super-pricey luxury condo buildings rise above New York City, international buyers are bucking the trend and purchasing historic townhouses instead.

According The Wall Street Journal's Candace Taylor, more and more foreigners are looking into buying brownstones as secondary residences, opting out of the condos that have long been popular for this particular group.
Townhouses, many of which were built in the late 19th and early 20th century, can be difficult to maintain, and they don't have the services that make living in a doorman building is so convenient.

However, there are some unexpected benefits to living in a brownstone. As demand for luxury condos grows, housing boards for those buildings have begun investigating potential buyers' financial background more than ever before. The privacy of a townhouse would be much more attractive to Europeans or other foreigners who are not accustomed to disclosing their finances.

"More and more, the tendency is to go toward a full townhouse purchase because they can be anonymous, and they can get all the space for a fraction of the price," Adie Kriegstein, an agent at CORE who recently represented a French family in the purchase of a townhouse on West 77th Street, said to the Wall Street Journal.

The numbers show that townhouses in Manhattan do tend to be slightly cheaper than luxury condos.

For the third quarter of 2013, the average price per square foot for a townhouse was $1,144, compared to $1,379 for condos.

And the most expensive condos are much pricier than the most expensive townhouses — condos at 15 Central Park West average at $5,487 per square foot, compared to $2,440 per square foot at the Harkness Mansion on the Upper East side.

Plus, there are plenty of ways to create a full-service experience in a brownstone, from hiring a property manager to installing a virtual doorman.

All of the buzz surrounding townhouses is starting to spread to historic walk-up apartments as well.
Data from real estate consultants Miller Samuel showed that the number of walk-ups sold increased by 64% over the last year, a huge jump compared to the 22% increase for apartments in full-service doorman buildings.

"There is a new generation of renters out there who don’t need a doorman, and want something unique and different," Jordan Sachs, president of residential brokerage firm Bold New York, told The New York Times. "Walk-ups can offer a wonderful combination of old prewar New York mixed with new design, and that can be hard to find in a cookie-cutter doorman building."

Meet Shaun Osher: Founder and CEO of CORE

Leverage Global PartnersDecember 19, 2013
A South African native, Shaun Osher set out in 2005 with business partner Jack Cayre to create an innovative, independent real estate brokerage. Osher’s company would set itself apart from any other NYC brokerages by embracing a focus on transparency and technology that would lead the way in the marketing and selling of real estate. Now a fixture on HGTV’s Selling New York, with one of the most successful independent brokerages in New York City, he’s come a long way. This is Shaun Osher.

At the age of 21, Shaun made a bold decision to get on a plane from South Africa to follow his dreams. He found himself in New York City with his saxophone and a thirst for success. A lover of music, Shaun would play his saxophone at venues throughout the city, earning just enough money to get by. But this wasn’t enough for Shaun, and in 1994, he decided to enter the real estate business. After being a top-producing agent for the next 15 years in New York’s downtown area, Shaun founded CORE with partner Jack Cayre. The name derives from the partners’ names, Cayre Osher Real Estate (CORE).

Osher says that he set out to create a company that had a different set of values than other NYC brokerages. “Our business model is different from other companies because we find inspiration from other innovative industries and think of ourselves as a marketing company first that happens to sell real estate.” This foundation has proved to be quite successful for Shaun and his associates, and their customer-first approach has earned them a top seat as the go-to New York City brokerage.

A New York transplant, Osher has a great love for the city he lives and does business in. He says, “The energy and diversity of the city always keeps me on my toes and inspired.” Aware of the differences in his market compared to other markets around the world, Shaun has a keen sense of the rhythm in his city. “The fundamentals are the same in the way that we think of the client first, and have built our resources to meet their needs. NY is a market that moves faster than other parts of the globe, so it is important to be nimble and responsive,” he says.

As New York City’s number one brokerage in its class, CORE’s distinct market presence is attributed to its unwavering commitment to innovation, luxury, customer experience and the evolution of real estate. Osher has always had his finger on the pulse of technology and social media, and effectively understands its importance in this business.

Shaun says, “Technology evened the playing field for the small boutique business. In fact, it has given us the edge, because we have the ability to react faster, and innovate. We were the first company to embrace social media and online marketing and recognize it as a powerful medium to communicate.”

This mindset has served CORE well, and in 2010 the company began its featured role on the television show Selling New York as an expert in local New York real estate. Now regulars on the show, Shaun has found great value in this exposure. Speaking on the HGTV featured-brokerage experience, Shaun said, “It has given us instant global recognition and a platform to showcase our agents and business.”

Outside of selling some of New York City’s finest real estate, Shaun’s first love is jazz music and his saxophone. He’ll play his sax any chance he gets. Additionally, he says, “I also love to stay active, so I’ll cycle, run, and exercise quite a bit.” Between this and his CORE duties, Shaun stays very busy.

When asked how his colleagues would describe him, Osher said, “Dedicated, honest, passionate, creative and full of energy.” All qualities fitting for the President of the top independent brokerage in New York City.

Leverage Global Partners is thrilled to be working with Shaun Osher and his team at CORE, and welcome them to the network.

One Museum Mile Announces Sales Success

Unique HomesDecember 19, 2013
One Museum Mile, the new residential condominium located at 1280 Fifth Ave. on Central Park in Manhattan, has reached 90 percent closed and in contract, with 33 closings in the past six months alone totaling more than $65 million, announced CORE, the exclusive sales and marketing firm for the building.

Recent sales include a three-bedroom residence that closed for $3.745 million, or $2,133 per square foot, the highest price per square foot ever achieved for an apartment in the neighborhood. The sale broke the previous record held by another three-bedroom apartment at One Museum Mile, which sold for $2,030 per square foot.

“This milestone is as much a testament to this exquisite Robert A.M. Stern building as it is to the transformation of perception. At the top of Central Park, this is one of the most beautiful neighborhoods in the city,” stated Tom Postilio, CORE’s Director of Sales for One Museum Mile. “We have again toppled our previous record pricing. This neighborhood is not emerging – it is blossoming.”

A select few units remain available for sale, including a one-bedroom, 1,200-square-foot residence with private terrace offered at $1.395 million. Two-bedroom apartments with Central Park views start at $1.725 million, and three-bedroom homes start at $1.895 million.

The 116 residential interiors at One Museum Mile were created by Andre Kikoski, who also designed the award-winning restaurant The Wright at the Guggenheim. Robert A.M. Stern Architects, LLP, served as design architect for the building. SLCE Architects served as architect-of-record, and Manhattan-based real estate private equity firm Brickman is the developer of the building.

Amenities include a 24-hour full-service concierge, landscaped roof terrace, rooftop pool and terrace overlooking Central Park, fitness center with terrace and a residents’ lounge with fireplace. There is also a media lounge and card room, children’s playroom, teen game room, formal conference and dining room on Central Park, bicycle room, cold storage in the lobby and private storage. A 421a tax abatement is in place.

Each apartment at One Museum Mile features an open kitchen and breakfast bar, Bosch dishwasher, Thermador stainless steel oven, cooktop and refrigerator and a Bosch washer and dryer.

Same View, Less Money

The New York TimesDecember 19, 2013
As new luxury high-rises like One57 garner stratospheric prices for their unobstructed Central Park views, some developers are focusing on the potential of the park’s northern frontier. At a development on West 110th Street, developers hope to draw buyers farther north with the promise of Central Park views at a more modest price.

Sales began last summer at One Morningside Park, a 22-story condominium at the corner of West 110th Street and Manhattan Avenue. Already more than 60 percent of the 54 units have sold, including a 525-square-foot one-bedroom that sold for $610,000, and a 2,160-square-foot space combined from three units that sold for $2.738 million. Although the prices are lower than in neighborhoods farther south, they approach the top of the market for the immediate neighborhood, which sits at the junction of Morningside Heights, Manhattan Valley and Harlem. Nestled between Central Park and Morningside Park, the development provides park views from two sides as well as views of the Cathedral Church of St. John the Divine.

“The people who have bought here realize very quickly the value of this building,” said Shlomi Reuveni, the Brown Harris Stevens Select broker who is marketing the development. “They have really captured an incredible opportunity here. By all indications there is a huge upside to this building in the future.”

One Morningside Park is one of a handful of properties built along the northern boundary of Central Park in recent years, tapping into the seemingly insatiable desire for skyline views. This summer at 111 Central Park North, a 19-story condo, an apartment sold for $2.2 million, and on Fifth Avenue, a three-bedroom condo at One Museum Mile, designed by Robert A. M. Stern Architects, sold for $2.995 million, according to MNS.

“We’re seeing high-rise development along Central Park North that has tremendous views, but yet you’re in neighborhoods that are not as expensive as those to the south,” Jonathan J. Miller, the president of the appraisal firm Miller Samuel. Many of the One Morningside Park buyers have been priced out of hotter markets like the Upper West Side, where the average sale price exceeds $2 million, according to data provided by CityRealty. By comparison, the average in Morningside Heights is $981,000.

The top penthouse at One Morningside Park provides 360-degree views of New York City. To the south, a resident will be able to see all the way down to One World Trade Centerand as far north as the George Washington Bridge. Neither of the two penthouses is on the market yet.

Interiors offer a sleek, modern aesthetic with wide-plank oak floors and kitchens with stainless-steel appliances, subway-tile backsplashes and quartz countertops. To capitalize on the expansive views, the building has oversize corner windows, glass balconies, and shared rooftop garden space with an outdoor kitchen.

“We really wanted to bring the exterior into the interior because of where the building is located,” said Shay Alster, a partner at GF55 Partners, which designed both interior and exterior.

Prices at One Morningside Park are steadily climbing. The remaining one-bedroom is listed at $925,000. Two-bedrooms range from $1.436 million, for a 1,051-square-foot space, to $1.949 million for a 1,397-square-foot space. And three-bedrooms range from $1.911 million, for 1,265 square feet, to $2.302 million for 1,383 square feet. Many units have balconies.

The neighborhood has changed in recent years, with new retail moving in. Tribeca Pediatrics plans to open a branch nearby on Frederick Douglass Boulevard, and Cafe Amrita, a cozy coffee shop that serves Belgian waffles, chai lattes and quiche, is less than a block away from the new condo.

For many Upper West Side hopefuls, Morningside Heights is only a few blocks north of their initial search zone. Paul Alexander had narrowed his search for a two-bedroom to the Upper West Side when he drove past the One Morningside Park construction site and saw signs around the scaffolding.

“I said, ‘Oh, my God, they’re building there,’ ” said Dr. Alexander, who currently lives near Philadelphia but has a practice in Manhattan. “It’s just such an ideal location.”

Dr. Alexander, who lived in the neighborhood when he was a graduate student at Columbia University, is under contract for a two-bedroom on the Central Park side of the new building. To him, it “just seems like the perfect place to be.”

The New Taste for New York Townhouses

The Wall Street JournalDecember 19, 2013
Waves of international buyers are causing a sea change in Manhattan's luxury property market.

Affluent out-of-towners are starting to spurn glitzy, full-service condo buildings as prices reach upward of $90 million, opting instead to buy older townhouses, which are seen as a better value, real-estate agents say.

Brian Lewis, a broker at Halstead Property in Manhattan, says he put a historic Charlton Street townhouse on the market in the spring for $7.25 million and was inundated with inquiries from buyers in Russia, South America and Asia, many of whom planned to use the house as a pied-à-terre. "Usually when I get a call and it's a foreign buyer, I'm pulling out my new development Rolodex," says Mr. Lewis, who later lowered the price to $6.25 million. "The palate of our foreign buyers is changing before our eyes."

The city's townhouses, many of which were built in the late 19th and early 20th centuries, have a reputation for being difficult to maintain. In addition to regular upkeep, tasks like show-shoveling and package pickup typically fall to the homeowner. As a result, historic brownstones have largely been shunned by pied-à-terre buyers and other purchasers who don't plan to use them as a primary residence.
"People look at New York and think of modern conveniences," says Robert Dankner, of Prime Manhattan Residential. "But I have seen more of an emerging trend with buyers who don't live here full time embracing the townhouse market." He is representing a client from Switzerland who is in the process of buying a West Village townhouse for around $10.5 million.

The shift has picked up steam in recent months, says Kevin Royer, an agent at Halstead who is working with an Israeli buyer looking to purchase a townhouse in Brooklyn. "Since this summer, maybe since April, people are suddenly going crazy."

Contributing to the trend is condo boards' increasing scrutiny of buyers' finances. Many boards now ask for extensive income verification from buyers—even all-cash buyers, says Halstead agent Sarah Parsons. "It's almost like a co-op board," she says. Many of her European buyers, who aren't used to revealing financial information, are now choosing townhouses. "They don't want to disclose what they make," Ms. Parsons says.

Price per square foot and perceived investment value are the other main motivators, brokers say. "More and more, the tendency is to go toward a full townhouse purchase because they can be anonymous, and they can get all the space for a fraction of the price," says Adie Kriegstein, an agent at Core who recently represented a French family in the purchase of a townhouse on West 77th Street.

The average price per square foot of a Manhattan townhouse in the third quarter of 2013 was $1,144, compared with $1,379 for condos, according to data by Miller Samuel Real Estate Appraisers & Consultants. At the high end of the market, the price gap widens. A condo penthouse at 15 Central Park West set a record when it closed last year for $88 million, or more than $13,000 per square foot. The priciest townhouse sale on record in the city, by contrast, is the 21,700-square-foot Harkness Mansion on the Upper East Side, which was bought by private-equity investor J. Christopher Flowers in 2006 for $53 million, or around $2,440 per square foot.

Jonathan Miller, chief executive of Miller Samuel, points out that comparisons between new construction condos and resale townhouses are somewhat flawed, especially because brownstones don't have the doormen or views usually found in tall towers. Still, buyers have noticed the price disparity.

Ms. Kriegstein's French client, Cecile Caer, says price was the primary factor in her family's decision to opt for a townhouse. Ms. Caer, 43, says she and her husband, an advertising executive, looked at several condos, including one they liked at the Apthorp on the Upper West Side, but decided that a townhouse offered the best value and potential return on investment. They bought a 5,000-square-foot home for $5.2 million, or just over $1,000 per square foot. "We looked at the townhouse and thought: We can do a beautiful job renovating, have all the space we want and still be at about the same price as buying a condo," says Ms. Caer. The trade-off is that the home needs a major renovation, which likely won't be completed until 2015. But she says she feels confident that for "the price you buy versus the price you can eventually sell, the townhouse was the best investment."

Ms. Caer says she doesn't yet know how much time her family will spend in Manhattan—they also have homes in France and Canada—but she plans on hiring a property manager or housekeeper to check on the home while they are away.

While condo fees in some New York buildings are thousands of dollars a month, Halstead's Ms. Parsons says hiring a property manager or part-time super can cost $200 to $500 per month. And with a proliferation of property-management firms and new technology such as virtual doormen, taking care of homes from afar is easier than ever.

That was certainly a consideration for Carsten Thoma, a 39-year-old Zurich resident who is looking to buy a multifamily townhouse in Brooklyn. Mr. Thoma, who frequently travels in his role as president of Swiss e-commerce firm Hybris Software, plans to keep one unit for his own use when he's in town, and rent out the others. He won't be in New York "a huge chunk of the year," but that doesn't bother him.

"You can easily create a similar experience" to a full-service condo, he says, since there are "concierge services left and right. New York is a super services-oriented city."

Townhouses also come without the monthly common charges that condo owners pay. "We have a lot of international buyers who look at townhouses because they don't want to have to deal with maintenance fees that are very high, and you're not there," says Michelle Bourgeois, an agent at Town Residential. "You can have somebody maintain the townhouse and still come out ahead."

The new interest in townhouses has started to affect prices. Jed Garfield, head of Leslie J. Garfield Real Estate, which specializes in Manhattan townhouses, estimates that during the past two years, prices have grown about 20% per year, compared with 3% to 4% a year before the financial crisis. "The last couple of years, it's really jumped," he says.

The median sale price of a Manhattan luxury condo was $5.25 million in the third quarter, compared with $4.32 million for townhouses, according to Miller Samuel. But townhouses have shown more appreciation over the past six years, with the median price increasing 12.9%, compared with 11.1% for luxury condos. For luxury townhouses, the median sale price jumped 20.4%, from $15.2 million to $18.3 million, between 2009 and 2013.

The New Taste for New York Townhouses

The Wall Street JournalDecember 19, 2013
Waves of international buyers are causing a sea change in Manhattan's luxury property market.

Affluent out-of-towners are starting to spurn glitzy, full-service condo buildings as prices reach upward of $90 million, opting instead to buy older townhouses, which are seen as a better value, real-estate agents say.

Brian Lewis, a broker at Halstead Property in Manhattan, says he put a historic Charlton Street townhouse on the market in the spring for $7.25 million and was inundated with inquiries from buyers in Russia, South America and Asia, many of whom planned to use the house as a pied-à-terre. "Usually when I get a call and it's a foreign buyer, I'm pulling out my new development Rolodex," says Mr. Lewis, who later lowered the price to $6.25 million. "The palate of our foreign buyers is changing before our eyes."

The city's townhouses, many of which were built in the late 19th and early 20th centuries, have a reputation for being difficult to maintain. In addition to regular upkeep, tasks like show-shoveling and package pickup typically fall to the homeowner. As a result, historic brownstones have largely been shunned by pied-à-terre buyers and other purchasers who don't plan to use them as a primary residence.

"People look at New York and think of modern conveniences," says Robert Dankner, of Prime Manhattan Residential. "But I have seen more of an emerging trend with buyers who don't live here full time embracing the townhouse market." He is representing a client from Switzerland who is in the process of buying a West Village townhouse for around $10.5 million.

The shift has picked up steam in recent months, says Kevin Royer, an agent at Halstead who is working with an Israeli buyer looking to purchase a townhouse in Brooklyn. "Since this summer, maybe since April, people are suddenly going crazy."

Contributing to the trend is condo boards' increasing scrutiny of buyers' finances. Many boards now ask for extensive income verification from buyers—even all-cash buyers, says Halstead agent Sarah Parsons. "It's almost like a co-op board," she says. Many of her European buyers, who aren't used to revealing financial information, are now choosing townhouses. "They don't want to disclose what they make," Ms. Parsons says.

Price per square foot and perceived investment value are the other main motivators, brokers say. "More and more, the tendency is to go toward a full townhouse purchase because they can be anonymous, and they can get all the space for a fraction of the price," says Adie Kriegstein, an agent at Core who recently represented a French family in the purchase of a townhouse on West 77th Street.

The average price per square foot of a Manhattan townhouse in the third quarter of 2013 was $1,144, compared with $1,379 for condos, according to data by Miller Samuel Real Estate Appraisers & Consultants. At the high end of the market, the price gap widens. A condo penthouse at 15 Central Park West set a record when it closed last year for $88 million, or more than $13,000 per square foot. The priciest townhouse sale on record in the city, by contrast, is the 21,700-square-foot Harkness Mansion on the Upper East Side, which was bought by private-equity investor J. Christopher Flowers in 2006 for $53 million, or around $2,440 per square foot.

Jonathan Miller, chief executive of Miller Samuel, points out that comparisons between new construction condos and resale townhouses are somewhat flawed, especially because brownstones don't have the doormen or views usually found in tall towers. Still, buyers have noticed the price disparity.

Ms. Kriegstein's French client, Cecile Caer, says price was the primary factor in her family's decision to opt for a townhouse. Ms. Caer, 43, says she and her husband, an advertising executive, looked at several condos, including one they liked at the Apthorp on the Upper West Side, but decided that a townhouse offered the best value and potential return on investment. They bought a 5,000-square-foot home for $5.2 million, or just over $1,000 per square foot. "We looked at the townhouse and thought: We can do a beautiful job renovating, have all the space we want and still be at about the same price as buying a condo," says Ms. Caer. The trade-off is that the home needs a major renovation, which likely won't be completed until 2015. But she says she feels confident that for "the price you buy versus the price you can eventually sell, the townhouse was the best investment."

Ms. Caer says she doesn't yet know how much time her family will spend in Manhattan—they also have homes in France and Canada—but she plans on hiring a property manager or housekeeper to check on the home while they are away.

While condo fees in some New York buildings are thousands of dollars a month, Halstead's Ms. Parsons says hiring a property manager or part-time super can cost $200 to $500 per month. And with a proliferation of property-management firms and new technology such as virtual doormen, taking care of homes from afar is easier than ever.

That was certainly a consideration for Carsten Thoma, a 39-year-old Zurich resident who is looking to buy a multifamily townhouse in Brooklyn. Mr. Thoma, who frequently travels in his role as president of Swiss e-commerce firm Hybris Software, plans to keep one unit for his own use when he's in town, and rent out the others. He won't be in New York "a huge chunk of the year," but that doesn't bother him.
"You can easily create a similar experience" to a full-service condo, he says, since there are "concierge services left and right. New York is a super services-oriented city."

Townhouses also come without the monthly common charges that condo owners pay. "We have a lot of international buyers who look at townhouses because they don't want to have to deal with maintenance fees that are very high, and you're not there," says Michelle Bourgeois, an agent at Town Residential. "You can have somebody maintain the townhouse and still come out ahead."

The new interest in townhouses has started to affect prices. Jed Garfield, head of Leslie J. Garfield Real Estate, which specializes in Manhattan townhouses, estimates that during the past two years, prices have grown about 20% per year, compared with 3% to 4% a year before the financial crisis. "The last couple of years, it's really jumped," he says.

The median sale price of a Manhattan luxury condo was $5.25 million in the third quarter, compared with $4.32 million for townhouses, according to Miller Samuel. But townhouses have shown more appreciation over the past six years, with the median price increasing 12.9%, compared with 11.1% for luxury condos. For luxury townhouses, the median sale price jumped 20.4%, from $15.2 million to $18.3 million, between 2009 and 2013.
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