Manhattan Luxury-Home Supply Dwindles as High-End Demand Jumps

Jason Haber, who runs a New York real estate brokerage firm, is struggling to find apartments to show a client who’s in the market for a Manhattan home priced around $8 million.

Faced with a dwindling supply of luxury properties, Haber said his agents at Rubicon Property have resorted to mailing letters to 300 condominium and townhouse owners around the city to see if anyone might consider selling.

“That’s not something you would do if the market was flush with high-end inventory,” said Haber, co-founder and chief executive officer of Rubicon. “That’s a sign of the times. This is a ready, willing and able buyer and we can’t find the product for him.”

International buyers seeking stable investments and “resolute” New Yorkers eager for deals at prices still in a post-recession dip have fueled a yearlong increase in sales of homes priced at $5 million and above, Haber said. The surge drove down the supply of Manhattan apartments for sale in that range last month to the lowest level for an October since 2007, according to, a property-listings website.

There were 832 homes on the market with asking prices of at least $5 million last month, compared with 862 in October 2010, 917 in 2009 and 909 in 2008, StreetEasy data show. In October 2007, near the real estate market’s peak, there were 588 listings.

“Overall Manhattan inventory is shrinking,” said Sofia Song, vice president of research at StreetEasy. “In the $5 million and up segment, it is specifically new-development inventory that is shrinking.”

$10 Million Deals

Sales of Manhattan luxury apartments, defined as the top 10 percent of all condo and co-op transactions by price, jumped 17 percent in the third quarter from a year earlier, according to appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate.

Of the 311 sales in the category, 25 were priced at $10 million and above. That was the second-highest level since the 2008 collapse of Lehman Brothers Holdings Inc., surpassed only by the second quarter of this year, according to Jonathan Miller, president of New York-based Miller Samuel.

“It’s been a good year, with fairly robust demand at the upper end of the market,” Miller said in a telephone interview. “This wasn’t unique to Manhattan. Across the region, we were seeing the high end seem to wake up.”

Prices haven’t returned to peak levels. The third-quarter median price in the top 10 percent of the market was $4.17 million, down 16 percent from the high of $4.99 million in the first three months of 2008, according to Miller.

Weill Penthouse

Miller traced the beginning of the latest boom to last November, when developer William Lie Zeckendorf sold his penthouse at 15 Central Park West for $40 million. Also that month, the penthouse at Superior Ink Condominiums and Townhouses in the West Village sold for $31.5 million, a record price for a downtown Manhattan condo, Miller said.

Another record could be broken if former Citigroup Inc. Chairman Sanford Weill sells his penthouse at 15 Central Park West for anything close to the $88 million asking price. Weill put his 6,744-square foot (627-square-meter), full-floor condo on the market on Nov. 11. The most expensive Manhattan residential transaction so far is a $53 million townhouse deal in 2006, Miller said.

Data from StreetEasy show 12 completed transactions for $20 million and above in the three months ended Sept. 30, the most since the same period of 2008, when there were 20.

‘Herd-Like Mentality’

A “herd-like mentality” has spurred luxury buyers in the past several quarters, said Noah Rosenblatt, founder of, a real estate analytics and consulting company in New York.

“When they start to see apartments go into contract again and again, they start to think their options are being limited,” he said. “They’re more willing to pull the trigger on a deal.”

Data compiled by UrbanDigs show demand for apartments priced at $5 million and above began to rise in February. Pending sales -- the number of properties that moved from an active listing to a signed contract -- jumped from 70 in February to 152 in late April. That was the biggest resurgence in that price range since 2008, Rosenblatt said.

A significant number of those deals probably were completed in the three months through September and were reflected in third-quarter sales data, according to Rosenblatt.

Slowdown Looms

Reports for the fourth quarter probably will show a drop-off because of a seasonal slowdown and economic turmoil that may have hurt contract signings, he said. On Nov. 14, UrbanDigs data showed 104 apartments under contract for at least $5 million, down from a post-recession peak of 156 at the end of July.

“We don’t have the pipeline of future deals that are going to be close to what we had for the third quarter,” he said.

The Standard & Poor’s 500 Index fell 14 percent in the third quarter, the most since 2008, amid concern that the U.S. could enter another recession.

“The whole market started to come down, and the high-end was part of that slowdown,” Rosenblatt said.

Rubicon’s Haber expects he won’t be spending as much time on luxury deals in the coming months. The supply isn’t there to fuel continued transactions, he said.

One57 Tower

One builder hoping to capitalize on a shortage of high-end apartments is Extell Development Co. The 95 units in the company’s One57 tower near Carnegie Hall will range from $3,500 to $8,000 a square foot when sales officially begin later this month, according to Extell President Gary Barnett. The website for the 90-story project asks potential buyers to register and choose a price range from $5 million to $30 million and above.

One57, slated to become New York City’s tallest residential building upon completion in 2013, has little competition for high-end buyers, according to Barnett.

“Everything that people are talking about coming to market is at least two years behind our project,” he said. “I expect to be sold out by then.”

Haber said One57’s units may be of “great interest” to luxury apartment hunters.

“When I first saw those figures, I thought to myself, here’s a building for the 1 percent of the 1 percent,” the broker said. “But guess what? Those are the people doing the frenetic buying.”

Shari Scharfer-Rollins, a senior vice president at the Corcoran Group brokerage with a foreign client who’s considering buying at One57, said she’s seen a shift in the level of interest at the high end in the past year.

“Inventory is down and demand is up,” she said. “The dollar is weak and I think foreign buyers find that they can get more in New York City as an investment than they used to be able to.”

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