One in Four of Manhattan’s Luxury Apartments are Unsold
Posted by Wei Min Tan on September 25, 2019
The New York Times reported that one in four of Manhattan’s new luxury apartments are unsold. This equates to about 4,100 apartments out of the 16,200 condo units built since 2013. The article illustrates the oversupply of new condos in Manhattan amid fears of a coming recession, change in tax law, trade wars and political uncertainty.
Key points on the oversupply of new condos:
Ultraluxury Towers: One 57, the forerunner to Billionaire’s Row, remains 20 percent unsold despite having started marketing about 8 years ago. In a normal market, buildings typically sell out in 2 to 3 years. One 57 has an average price per sqft of $5,500. For context, the Manhattan average price per sqft was $2,077 in Q2’2019.
When looking at the seven ultra luxury towers on Billionaire’s Row, 40 percent of the units are unsold. At the current run rate, it would take 9 years to sell all this inventory. 111 West 57 Street, at $6,300 per sqft, is 80 percent unsold. 100 E 53 Street, at the corner of 53rd Street and Lexington Avenue, is 72 percent unsold. 100 E 53 St is at $3,300 per sqft. 53 W 53 St, at $3,700 per sqft, is 67 percent unsold. 15 Hudson Yards, at $3,800 per sqft, started marketing in 2016 and to date, has only sold 37.5 percent of units.
The oversupply of ultraluxury condos is something I had predicted during a CNBC interview a few years ago.
Deal example: Represented client with the purchase and resale of this new condo in Midtown East, close to United Nations.
Read more: Pros and cons of new property in Manhattan
Neighborhoods: The Lower East Side is the leader in unsold inventory, with 68 percent of new condos unsold. This is mainly driven by the 800 unit One Manhattan development by Extell. Midtown West, driven by Hudson Yards, has 45 percent unsold new condos.
Developers’ incentives: 100 Barclay and now One Manhattan have started a rent-to-own program whereby a buyer can rent the apartment now and have the paid rent applied towards the condo’s purchase price. Developers are also offering brokers bonus commissions for bringing buyer clients over. And in some cases, paying broker commission before the contracted closing date.
The article ended with a quote saying, from a supply perspective, the current situation is as bad as it was after Lehman, referring to the collapse of the financial firm in 2008.
Deal example: Client booked this new development in Hudson Square, location of Google’s second Manhattan campus set to open in 2020.
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