By Marc Santora; Published in New York Times Feb 10, 2012
WHILE the economy remains stubbornly sluggish and home sales nationwide continue to sag, Manhattanâ€™s
real estate market has largely stabilized, with apartments in some
neighborhoods selling for prices not seen since the headiest days of the
Homes at two recent Robert A. M. Stern designs, 15 Central Park West,
far left, and Superior Ink, are among the cityâ€™s most expensive.
But on the road to recovery, one segment of the market has outpaced
the rest: ultraluxury, which analysts roughly define as properties
costing $7 million and up. At these lofty heights, there was only the
slightest of hiccups after the crash, and in the ensuing years, values
have soared, with some apartments doubling in price.
Normally, that news would mean rising prices in every other segment
of the market, from the tiniest starter studios to family-size
four-bedroom co-ops. But that is not happening, even with interest rates
at record lows and prices considered reasonable by Manhattan standards.
â€œThere is a greater disconnect between the very top of the market and
everything else than I have ever seen in my 25 years in the business,â€
said Jonathan J. Miller, the president of the appraisal firm Miller
Part of the reason for this, brokers and analysts say, is that the
wealthiest buyers are immune to practical matters like stricter lending
standards and shrunken Wall Street bonuses.
In the last three years there has also been a dry spell in new
construction, and for those with money to burn, the limited inventory
has stoked demand. And with New York now seen as a refuge during
uncertain times, international buyers are helping to drive the prices
â€œMost people would say that the top end of the market is
bulletproof,â€ said Pamela Liebman, the president of the Corcoran Group,
â€œand that buyers at this end donâ€™t have the same sensitivities as the
rest of the market and their confidence does not wane. There is a reason
that HermÃ¨s has a waiting list for belts and bags.â€
Defining ultraluxury is not an exact science.
â€œWhen I started,â€ Mr. Miller said, â€œÂ â€˜luxuryâ€™ meant the building had a
doorman. Now, because luxury has become generic, they have had to add
the adjective ultra.â€
Generally, brokers agree that anything priced above $7 million fits
the bill. Mr. Miller compared the sales at the top 5 percent of the
market â€” apartments priced over $6 million â€” with those at the bottom 5
percent â€” apartments priced below $300,000 â€” over the last decade. After
adjusting for inflation, he found that the value gap between the most
and the least expensive properties has never been wider.
â€œIt seems to be part of a wider global phenomenon, where there is an
ever greater concentration of wealth at the upper echelons,â€ he said.
Many moderately priced properties sold last year for roughly the same
price that they brought from 2006 to 2008. Mr. Miller described a
one-bedroom at 360 East 72nd Street as typical. The owners paid $770,000
for it in 2006 and sold it last year for $750,000, about a 2 percent
loss. Meanwhile, a four-bedroom at 151 East 58th Street, bought in 2005
for $13 million, sold five years later for $17.75 million, a 36 percent
The most expensive apartments constitute only a fraction of the
market, but the impact of their rising value is greater than just the
eye-popping sums they command. Along with the surge in demand for lavish
prewar co-ops, the success of developments like Superior Ink in
Greenwich Village, and 15 Central Park West and the Laureate on the
Upper West Side, makes it all the more likely that future developers
will choose luxury over affordability.
In the 1980s, it was rental high-rises like those dotting the Upper
East Side that appealed to developers. While they often offered some
good-sized apartments, they were designed to accommodate as many
apartments as possible. Operating under a different mindset, developers
of those buildings often put fitness centers on the top floor, whereas
that space now would be reserved for a penthouse getting top dollar.
The condos that have opened in the last few years often have larger
apartments and fewer units. They are aimed squarely at the rich, perhaps
none more so than the new Extell development at 157th West 57th Street,
When it opens next year, it will be the cityâ€™s tallest residential
building, at 90 stories, and the most expensive, with the cheapest unit
reportedly at $7 million. Fewer than 100 residences will be available.
New York has always had its share of trophy properties, but Ms.
Liebman identified the $45 million sale in 2003 of an apartment in the
Time Warner Center as the one that ushered prices into the stratosphere.
Whereas eight-figure deals were a rarity as recently as five years ago,
hardly a week went by last year without a sale over $10 million. The
gilt-edged properties were spread across the city, including penthouses
in TriBeCa and Union Square, co-ops on the East Side and new condos on
the West Side.
When the banker Sanford I. Weill sold an apartment at 15 Central Park
West late last year with an asking price of $88 million â€” more than
$13,000 per square foot â€” real estate executives said the deal signaled
another leap in the kinds of prices that are possible. Mr. Weill very
likely doubled his 2007 investment of $43,687,751.
The impact was immediate. For instance the reported asking price for
the penthouse at One57, first set at $90 million, soon neared $115
million. Still, at $7,000 per square foot, a certain kind of shopper
might consider it a bargain.
â€œEven if you are spending $40 million, it is comforting to know that
there are other people spending that kind of money as well,â€ said Kelly
Kennedy Mack, the president of the Corcoran Sunshine Marketing Group,
who has been a consultant to top-selling Manhattan developments
including One57. â€