Billionaires’ Row Neighbor Touted as NYC Bargain by Developer
(Bloomberg) -- Here’s one advantage to selling pricey condos near, but not on, Billionaires’ Row: You can tout your project as a bargain.
It’s a strategy that apartment landlord AvalonBay Communities Inc. is looking to as it begins marketing its first for-sale project, the Park Loggia, off Columbus Circle on West 61st Street in Manhattan.
The real estate investment trust acquired the site in 2015 for $300 million, near the peak of Manhattan’s high-end sales frenzy, with plans for luxury rentals and, perhaps, some condos. Since then, the borough has become saturated with both. AvalonBay studied its options and, well into construction on the 32-story project, decided the more-lucrative option was to go all-condo.
The pitch is that the homes are smaller than the full-floor, museum-like spaces seeking buyers along 57th Street and across from Central Park. So they’re relatively less expensive, but in the same neighborhood. Among the largest are the 1,916-square-foot (178-square-meter) three-bedroom units that begin on the 17th floor. They start at $6.58 million, or $3,431 a square foot.
“We think it’s priced right,” Martin Piazzola, AvalonBay’s senior vice president of development, said on recent tour of the building. “Something around the corner is probably 50% more per square foot -- or double. You do all the math and suddenly, they’re astronomical and we’re attainable.”
“Around the corner” is Extell’s rising Central Park Tower -- with a five-bedroom penthouse that’s listed for $63 million, or $8,905 a square foot -- and Vornado Realty Trust’s 220 Central Park South, where Citadel Chief Executive Officer Ken Griffin plunked down $238 million to buy America’s priciest home. Across the street is 15 Central Park West, a 12-year-old property where condos are listed for resale at $16.3 million on average, data from StreetEasy show.
All those developments draw some of their stratospheric pricing from their unobstructed views of Central Park. By contrast, the Park Loggia, on the corner of Broadway, offers views of those neighboring luxury buildings.
The lack of a premium for views and the smaller size of AvalonBay’s units “are a powerful amenity differentiator,” said Jonathan Miller, president of New York appraiser Miller Samuel Inc. “Because that’s not the normal product coming into that market.”
Selling condos in Manhattan has gotten tougher these days as the well-heeled take their time to sort through the sea of high-priced options. Buyers are also becoming more sensitive to carrying costs, thanks to the new tax law that limits how much of their property levies can be written off on their federal returns.
At the end of 2019, there will be about 9,004 unsold condos on the market in Manhattan, and it would take nine years to clear them all at the current pace of deals, according to estimates from Miller Samuel.
At the Park Loggia, named for the covered outdoor spaces that are its signature architectural flourish, 80% of the 172 condos are one- and two-bedrooms. One-bedrooms start at $1.64 million for a 782-square-foot apartment on the third floor with an additional 296 square feet of outdoor space, according to offering plans filed with the state attorney general’s office. Two-bedrooms start at $2.785 million.
The priciest unit is a four-bedroom penthouse with 2,391 square feet inside and 500 square feet of outdoor space, offered at $10.995 million.
AvalonBay waited until now, close to the building’s September completion date, to begin selling units, on the theory that buyers in a slowing market won’t commit to big deals unless they can view a finished product, Piazzola said. The company doesn’t expect to see proceeds from sales until the third or fourth quarter, executives said on a conference call in February.
“It’s not like nothing is selling,” Piazzola said. “If you’re delivering a product that people want at the right price point, it will move.”
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