While the overall housing market appears to be moving along at a good pace in Manhattan and Brooklyn, the luxury sector is doing a lot of heavy lifting in both boroughs. According to the latest Marketproof & UrbanDigs New Development/Resale Report — a fresh, joint analysis from real estate analytics firm UrbanDigs and New York City real estate data intelligence company Marketproof — “recent buyer enthusiasm seems to have shifted toward the higher-priced luxury sectors.” (“Luxury” is defined as properties priced at more than $4 million.)
“With more realistic pricing, luxury buyers are taking advantage of the lower asking prices,” said Arlene Reed, a broker for Warburg Realty, which was recently acquired by Coldwell Banker Real Estate LLC. “A hot stock market and low interest rates make this a great time to buy. During the pandemic, the rich got richer. Bored of being in the suburbs, they are returning to the city with money to spend.”
Perhaps more interestingly is the fact that new construction appears to leading the market rebound.
“Median asking prices jumped to $3.6 million, an increase of 71% from a year ago and 52% from asking prices in September,” the report noted. “This substantial increase is due in part to 200 East 83rd Street, a Robert A.M. Stern-designed luxury development by Naftali Group and Rockefeller Group, which reported 35 contracts ranging from $3.6 million to $11.5 million. Median price per square foot rose as a result to $2,300, a 20% uptick from a year ago and 11% from September.”
As New York City stages its comeback from the pandemic, luxury consumers’ preference for new construction is not entirely unexpected. They especially have gravitated towards finished spaces — even before COVID-19 struck. Now, people don’t want the stress, inconvenience or potential health risks that could come with a large remodeling project. Recent supply constraints, including construction labor shortages, building materials like lumber and even décor and furnishings — have only compounded the demand for newly built, completely done properties.
“It is not entirely surprising that most post-pandemic buyers prefer pristine and immaculate spaces that are previously unoccupied as opposed to older residences with wear and tear,” added Gerard Splendore, another broker for Warburg Realty. “After all, who wouldn’t want to move into an entirely new home, with the most modern accouterments and facilities at their disposal?”
Throughout the city this year, luxury condos have been beating out co-ops in the popularity department. As Splendore tells it, “Condos require less intrusive board packages and my most recent condo sale, which closed last month and was a property in the Upper West Side’s Alfred Condo, did not require the buyers to meet the board. Simplicity and swift closings are always preferable to delays, scheduling issues, and intrusive questions.” Adds Reed, who unfortunately has been on the losing side of acquiring a condo for a customer, who was outbid by the competition: “Condos can be highly financed with low interest rates, as compared to most co-ops, which only allow 50% financing and require a much larger cash outlay. It is much easier to purchase a property in a condo. Buyers do not have to jump through hoops for co-op boards. You can put it into a trust or a corporate entity. Plus, condos offer better views and far more amenities.”
In a post-2020 Manhattan, amenities have also become an important factor for buyers.
“With many more people working from home, they provide a lifestyle as well as an extension to your apartment space,” says Reed. “Roof decks and gardens are very important to most people today. Having a health club and spa, business center, and recreation rooms for the kids are major incentives.”
In fact, Splendore is currently working with a family who is willing to downsize from a three-bedroom apartment to a two-bedroom unit in a new development that has a range of amenities in the DUMBO, Brooklyn Heights, and Downtown Brooklyn areas.
“This family is willing to forgo a third bedroom to gain a pool, larger gym, and indoor basketball court,” he says. “Their children are young and prefer to share a bedroom and participate in activities outside the home in the building’s playroom, theatre, and gym as opposed to staying inside the apartment.”
Reed maintains that the downtown Manhattan market is always hot, with Tribeca, Soho, and the West Village remaining very desirable. “I am also finding that with all the new construction on the Upper East Side, it is once again gaining popularity,” she reveals. “There are several boutique condo developments going up and all are selling out fast. Developers are no longer giving concessions and prices have started to rise.” She says the buildings to watch on the Upper East Side are 109 East 79 Street, 1165 Madison Avenue and 200 East 83rd Street.
Splendore also expects the condos in Manhattan’s Upper West and Upper East Sides to remain highly in demand. “Condos in Brooklyn will also remain hot, particularly 186 Plymouth Street, Quay Towers in Brooklyn Heights, and 100 Clinton Street.”