Home News Analysis of NYC New Condo Inventory

Analysis of NYC New Condo Inventory

by admin
0 comment

Left to right: Gary Barnett of One Manhattan Square, Harry Macklowe of One Wall Street, Steve Witkoff of One High Line, Miki Naftali of 1045 Madison Avenue (Getty, One Manhattan Square, One Wall Street, Big Architects, The Benson)

Update, August 15th at 5:05 PM: Up the hill from Robert Moses’ 79th Street Boat Basin on the Upper West Side, a pre-war condominium conversion project is in the early stages of sales.

Built in 1926, the 393 West End Avenue building is being converted by Rabina and Simon Baron Development into 75 condominiums (down from the original plan of 88). This type of project was all the rage in his mid-2010s, but now he’s one of a dying breed. Conversions fell out of favor in 2019 when state legislators passed new tenant protection laws to prevent tenant evictions.

Declining condo conversions, combined with record home sales and declining land deals, ushered in a new era for the New York condo market. The end of excess inventory.in the last 10 years defined by the developer By peddling more products than buyers can handle, the next few years are likely to bring more alignment between supply and demand.

For the first time since 2018, new condo inventory fell below 6,000 units in Manhattan, according to data from Brown Harris Stevens Development Marketing. genuine article.

“The market stock will be less than four years old by the end of the year,” said Robin Schneiderman, who oversees new developments at BHS and expects the Manhattan condo market to be in short supply.

New listing and signed contract (Source: Marketproof)

Data compiled by Schneiderman’s team shows that sell-out prices for new condo conversion inventory have fallen to $1.5 billion since 2019, down from more than $8 billion since 2019, and inventory has fallen 73% over the same period. About 1,400 conversion units have been on the market since the Tenant Protection Act was passed, and over the past five years he has exceeded 5,000, with little to no future stock expected.

Overall, Manhattan’s new condo inventory is down about 10% from 6,508 units to 5,894 units after 2021, according to BHS. Marketproof analysis shows a 13% drop in availability since February 2021.

Ultra-luxury homes make the headlines, with homes priced above $10 million accounting for nearly 10% of Manhattan’s inventory, while buyers priced under $4 million make up about 3% of the market, according to BHS. two-thirds. That pool of buyers, likely in need of a mortgage, could afford to splurge until recently, thanks to historically low interest rates.

Last year, the market recorded a monthly net absorption rate of 958 condominium units, a 58% increase over 2020, with a monthly average of 935 and remained elevated through the end of May, according to Marketproof. The average monthly absorption rate from 2015 to 2019 was 606 units, down 36% from last year. Sales have slowed since mortgage rates soared, but the recovery after the peak of the coronavirus pandemic has paid off for new condo developers.

It didn’t always look that way.

“Buyers who need financing will slow down. They will go to the rental market or compromise.”

– Miki Naphtali, Naphtali Group

Miki Naftali asked some of his friends to check on his health after hearing that the project was set to go on sale just months after New York City became the U.S. epicenter of the pandemic. He claims to have called

In September 2020, his Naftali Group launched Benson, a Robert AM Stern-designed boutique building on East 78th Street in Lenox Hill. The building is now almost sold out. Property records show that 18 of his 25 homes have closed. Got a full asking price of $35 million, or over $5,000 per square foot, November 2020. According to StreetEasy, he has four other units under contract.

Like supersonic jets flying above storm clouds, the highest-flying buyers often pay all in cash, making them less vulnerable to rising interest rates. Given the volatile stock market and rising inflation, the Space Captain may see real estate as a timely investment.

Real estate’s reputation as an inflation hedge was equally compelling for buyers in need of financing, and these buyers were boosted when mortgage rates were low. boomed, which Naftali said also boosted the resale market. Interest rates on his 30-year mortgage have now reached about 5.2% after he rose to nearly 6% in late June. 30% less Sponsored Units July is up 40% year over year in Manhattan.

“Buyers who need funding will slow down,” Naftali said. “They will go to the rental market or compromise.”

concentrated bet

Waldorf Astoria rendering

Waldorf Astoria rendering

According to BHS, Manhattan has eight buildings available for sale with about 1,200 units, accounting for nearly one-fifth of the borough’s existing new condo inventory.

The list includes top-grossing conversions such as Dajia US’s Waldorf Astoria revamp and Harry Macklowe’s One Wall Street, as well as Steve Witkoff and Len Blavatnik’s One High Line (XI of former HFZ Capital) and Claremont Hall in Morningside Heights were developed by Lendlease and L+M Development Partners.

For developers, scale, or the ability to place many products on a single site, mitigates potential cost overruns by attracting more buyers with an amenity package that smaller projects cannot afford. helps.

Extell Development’s One Manhattan Square in Two Bridges, the largest of the group, boasts over 100,000 square feet of amenities, including a golf simulator, cold plunge pool, cigar room and pet spa. Both buyers and renters were offered his double-digit discounts during the peak of the pandemic, but those days may be gone forever.

“We haven’t changed our prices or negotiated otherwise. Another person on the other side said: Brooklyn PointThe company had considered converting some units to rentals given the strength of the rental market, but Goldstein said, “Our ultimate goal is to sell the condo project. is to do,” he said.

One Manhattan Square represents another change. That is the changing landscape of tax benefits. This building is one of his last new developments under the city’s 421a program to offer the purchaser his 25-year property tax relief. If legislators come up with an alternative to the program, it is expected to require a higher level of affordability, likely to benefit new development buyers who paid a median of $1.7 million for a unit in July. The condo market in the city, according to Jonathan Miller of the low appraisal firm Miller Samuel.

393 West End Avenue and Matt Baron of Simon Baron Development Group (Credit: Google Maps)

A further hindrance to the new development was the soaring construction costshas increased by as much as 15% during the pandemic, according to architecture firm SLCE.

Extell’s Goldstein said: But there are signs that a new construction cycle is about to begin.

“Theoretically, the higher the hard cost, the lower the land price,” he said. “But that’s just a theory and it doesn’t always happen.”

Currently, land for luxury projects fetches between $400 and $500 per square foot, according to Schneiderman. This is down about 50% from the peak market when HFZ purchased land for his XI. before facing the calculation its entire portfolio and West Chelsea project lost to Steve Witkoff and Len BlavatnikAnother project plagued by high land prices is the Haworth Building at 1289 Lexington Avenue. Rescued from Seruzzi Property.

In contrast, one of the best land deals since the pandemic was EJS Group’s purchase of 1305 Third Avenue for $331 per square foot based on a $32 million purchase price. His EJS, led by Ted Segal, plans to build his 38 units on site.

Overall, Manhattan’s new condo inventory pipeline has 51 buildings and 2,399 units, according to BHS data. However, Manhattan will remain an island and no more land will be created.

“Pipelines are smaller than people think,” said Schneiderman.

This story has been updated to reflect the revised number of units at 393 West End Avenue.

You may also like