Three years ago, Soo K. Chan, an architect well known in Singapore but new to the Manhattan luxury condo scene, posed a question to jaded New Yorkers: How about a pool in the living room?
Well, why not? It was a hit overseas, where Mr. Chan had designed pools for luxury apartments in Southeast Asia, and at the time the New York City condo market was on fire.
So Soori High Line, the new 31-unit luxury mid-rise in West Chelsea that Mr. Chan designed and developed, will have four-foot-deep saltwater pools in more than half of its apartments. The 24-foot-long pools, surrounded by a glass enclosure, are heated and partially open to the outdoors, enticing residents to swim even during a snowstorm.
The apartments — which range in price from about $3 million for a two-bedroom to $22.5 million for the five-bedroom, triplex penthouse — have ceilings as high as 18 feet, heated limestone floors, gas fireplaces and doorknobs wrapped in hand-stitched leather.
“Our approach is not to cut back,” Mr. Chan, also known as Chan Soo Khian, said of the shifting market. “In fact, what I’ve done is up the ante. A well-crafted building will speak for itself in a difficult market.”
In Manhattan’s new development scene, there are bold bets aplenty, but 2014 it is not. The ultraluxury market, with prices north of $10 million, has softened since the rise of billionaire’s row along 57th Street, and developers are taking note: Some are doubling down on ultraluxury and seeking new ways to stand out, while others pursue an underserved group – buyers willing to shell out between $1 million and $3 million for an “entry-level” home.
Builders who aim somewhere in the middle — in the $5 million to $10 million range — are feeling the tightest squeeze, because of oversupply and a dearth of buyers. And those with buildings under way are facing a tough choice: stay firm on pricing set when the market was stronger, with the risk of getting lost in the mix, or offer concessions to move what hasn’t sold?
Recent data tell a tale of two markets. The median sales price for new development in Manhattan rose to $3.3 million in the second quarter, up a staggering 22.8 percent from the same period a year earlier. At the same time, the average listing discount, or price drop, for new development was 7.5 percent — far more generous than it was the first quarter, when brokers discounted an average 2.8 percent. A year ago, agents were seeking an average of 1 percent above asking price.
“The expectation was that there are so many billionaires in the world, they’re a dime a dozen – and that’s not what happened,” said Jonathan J. Miller, a New York real estate appraiser.
The record prices of the last few years were driven in large part by contracts for exceptionally expensive units signed as far back as 2013, often before construction began, and because they have taken years to close, “they’ve been padding the market,” Mr. Miller said.
The market peaked in 2014, he said, when cranes seemed to dominate the city skyline. “It completely removed that sense of urgency” to buy, though builders have been slow to respond to the drop in demand, he said, adding that high land prices pushed them to build bigger, more expensive units to hit their margins, leaving less room for flexibility in price.
Now that is catching up with them. About 2,800 new units are expected to come onto the market in 2017, said Kelly Kennedy Mack, president of Corcoran Sunshine Marketing Group, which is about half the original projection.
Recent sales also suggest a shifting focus in the city: The Upper East Side is the top-selling neighborhood for new development this year, she said, with 12 percent of total sales, thanks in part to the new Second Avenue subway line. Midtown West and the Financial District rounded out the top three areas, and half of all new construction in the pipeline will be downtown.
The slowdown hasn’t deterred some very ambitious projects that developers hope will break records with nine-figure price tags. Central Park Tower, a new addition to billionaire’s row on West 57th Street, between Seventh and Eighth Avenues, anticipates total sales in excess of $4 billion, according to documents filed with the State Attorney General. That would make it New York’s most expensive residential tower ever. The mixed-use tower, which will have a Nordstrom department store at its base, will have 179 condos, according to paperwork filed by Extell, the developer.
In Lenox Hill, the developer Zeckendorf filed to list a $130 million triplex apartment at the under-construction 520 Park Avenue. Not to be outdone, Vornado Realty Trust, the developer at 220 Central Park South, has filed to list a $250 million, 23,000-square-foot quadruplex apartment in the limestone-clad tower. The current sales record, set in 2015, is a $100.5 million sale at Extell’s One57 tower.
Others are raising the stakes in different ways. Robert Gladstone, chief executive of Madison Equities, is betting that buyers in his Beaux-Arts conversion at 212 Fifth Avenue, in NoMad, will want bragging rights. He decided to scrap plans for two penthouses and create one ultraluxury triplex apartment with 10,000 square feet of living space and a 5,700-square-foot terrace. The asking price: $68.5 million.
“There are fewer people in the world who can buy it. But it’s the penthouse, not a penthouse,” he said. “If someone can spend $50 million, most of them could spend $70 million on an apartment.”
The space will have chevron-patterned flooring, a grand staircase and, as in all the units, a special air-filtration system. “People really dig that kind of detail,” Mr. Gladstone said.
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