April 8 (Bloomberg) -- Manhattan developer Bill Rudin hadn’t planned to start selling apartments at his Greenwich Village project until the end of this year. He began rethinking that strategy after getting cornered at a cocktail party.
“People came up to me and said, ‘We want to buy, we want to buy. When can we buy?’” Rudin said in an interview.
He opened a sales office in October for the Greenwich Lane, a complex under construction at the site of the shuttered St. Vincent’s Hospital, after an online sign-up list of would-be buyers for the 200 condominiums drew 1,100 names. More than half of the units at the development, still largely a field of dirt and skeletal towers, have sold at prices averaging $3,500 a square foot, in line with other projects downtown and a new luxury benchmark for the area.
While Midtown skyscrapers fringing Central Park are setting sales records and attracting international investors, downtown Manhattan’s new condos are breaking their own price barriers with a focus on local buyers. From the cobblestone streets of Tribeca to the low-rise landmarks of Greenwich Village, builders are accelerating projects with features and costs that rival high-end offerings farther north.
Contracts signed at newly built properties between 34th Street and the Financial District almost doubled last year to 1,222, according to brokerage Corcoran Sunshine Marketing Group. Buyers agreed to pay an average of $5.7 million in the fourth quarter, up 49 percent from a year earlier and a new record. The price per square foot of those deals rose 20 percent to a high of $2,915.
“It’s a new class of luxury product that’s being introduced,” said Kelly Kennedy Mack, president of Corcoran Sunshine. “We are seeing buyers who historically were attracted to Midtown come downtown. They’re getting the same high level of design and spectacular views.”
Downtown buildings accounted for 51 percent of Manhattan’s new-development sales last year, compared with 35 percent in 2012, according to the brokerage. Developers in the area have more than 4,000 units planned for construction or delivery within the next two years.
Projects such as Greenwich Lane, where the cheapest apartment is a one-bedroom for $2 million, and Magnum Real Estate Group’s planned conversion of a Verizon Communications Inc. office building in Tribeca are offering larger units, parking spaces and amenities designed to appeal to both New York City families and empty-nesters considering a move from the suburbs.
“We’re doing plenty of two, three, four and five-bedrooms,” Ben Shaoul, president of Magnum, said on a walk-through of the 32-story Verizon building at 140 West St., where 166 condos will be built on the top 22 floors.
Magnum, which plans to start sales in September, envisions units ranging from 1,200 to 3,500 square feet (111 to 325 square meters) that emphasize larger living rooms and common spaces. Apartments at the tower, across from the almost-completed 1 World Trade Center, are expected to start at $2 million, he said.
Plans call for a pool, fitness center and yoga room, as well as a lounge and wine bar in the building’s landmarked marble lobby, where murals on the domed ceiling depict the progress of human communication from carrier pigeons to the telephone. Duplex penthouses will span the 31st and 32nd floors, which until recently housed office suites for Verizon executives, Shaoul said.
A block away, the Witkoff Group and partner Fisher Brothers are proposing a condo tower at 101 Murray St., the site of a former St. John’s University campus, that would feature large apartments. The firms are considering plans that would make it easy for buyers to combine units to create an even bigger space, Steven Witkoff, president of Witkoff Group, said in an interview.
The idea came after some buyers at Witkoff’s 150 Charles, in the West Village sought more than one apartment, he said. The 91-unit development sold out in 12 weeks last year at prices averaging about $3,400 a square foot, with condos on the upper floors topping $6,000 a square foot. Ninety-five percent of the buyers were from New York, he said.
“There’s a lot of very well-heeled, entrenched people who are prepared to pay to be down there,” Witkoff said.
In the first quarter, purchases in new developments downtown were weighted toward larger units, with more than a third of deals for apartments with three or more bedrooms, according to a report by the Corcoran Group. The median price for those transactions was $3.84 million, up 9 percent from a year earlier.
The price record for downtown was set in January with the $50.9 million purchase of a 5,955-square-foot full-floor penthouse at the Walker Tower in Chelsea.
That still trails the most expensive deals in Midtown, where penthouses at Extell Development Co.’s One57 and Harry Macklowe and CIM Group’s 432 Park Ave. -- both skyscrapers with views of Central Park -- are under contract for more than $90 million. The developers of those projects have touted their sales to buyers from around the world, including South America, the Middle East, China and Russia.
New condo buildings are the latest step in the evolution of lower Manhattan, which has benefited from government funding in the years after the Sept. 11, 2001, terrorist attacks at the World Trade Center, said Mitchell Moss, a professor of urban policy and planning at New York University. The development of Hudson River Park and Pier 25 in Tribeca, and improvements in local schools, have made downtown a favorite destination among families with means to stay in the city, he said.
“It used to be that wealth was concentrated on the Upper East Side and now it can be located in Soho, the East Village. It’s much more dispersed,” Moss said.
New housing increasingly is being built on sites sold by nonprofit groups seeking to capitalize on soaring real estate values, leading to alarm among some preservationists.
“There’s concern that so much of the new development has skewed toward the ultra-high end, especially in some of the cases where it’s been replacing social services that serviced a much broader range of people from the neighborhood,” said Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation.
Neighborhood residents fought the closing of St. Vincent’s, the only hospital in southwest Manhattan, which treated survivors of the Titanic and the Sept. 11 attacks during its 160-year history. They argued that Rudin’s proposed residential project was out of character for the historic district and sought preservation of some of the original structures at St. Vincent’s, which shut down in 2010 after filing for bankruptcy.
As part of a deal with the city, Rudin Management Co. agreed to lower the height of its project and preserve some of the hospital facades. In addition, the developer donated $10 million and a building across the street from the Greenwich Lane site to North Shore-LIJ Health System, which will open an emergency-care facility there this year.
While construction goes on behind the hospital’s brick shell, buyers of Greenwich Lane condos are placing deposits in the off-site sales office, where an interactive computer screen magnifies floor plans and shows views from the planned apartments as captured by a drone-mounted camera.
A 4,442-square-foot penthouse that was listed for sale at $29 million is among the units under contract, according to real estate website StreetEasy.com. Not on the market yet is a triplex penthouse of more than 5,000 square feet. Its price tag will be more than $30 million, according to Bill Rudin, chief executive officer of Rudin Management.
The project -- consisting of five condo towers and five single-family townhouses -- is expected to be completed by the end of 2015, he said.
In the southern part of Tribeca, once largely a warren of government office buildings, more than $1 billion of sales were completed in the past year at 56 Leonard after the developer, Alexico Group LLC, waited out the financial crisis.
The foundation for the planned 60-story tower was poured in mid-2008, just before the collapse of Lehman Brothers Holdings Inc. Alexico halted deals and construction for more than four years, said Izak Senbahar, the company’s president.
Now, of the 145 units in the building, designed to look like a stack of delicately balanced blocks, only eight remain. A 7,800-square-foot duplex penthouse sold for $47 million.
The project “just hit a nerve where a lot of downtown people wanted to upgrade,” Senbahar said. “They needed a larger space, they wanted views, they needed a doorman and a garage.”
About 75 percent of the buyers were New Yorkers, said Senbahar, who initially assumed that much of the interest in the tower would come from overseas.
“Local people really grabbed it before we could do a marketing campaign overseas,” he said.
The surge in downtown demand is pushing up prices for all residences in the area. In Tribeca, the median asking price for new and previously owned homes jumped 25 percent in 2013 to $3.55 million, the highest in records dating to 2005, data from StreetEasy show.
Sellers in Greenwich Village sought a median of $3 million, up 20 percent from 2012 and also the highest on record, according to StreetEasy. The median asking price in Chelsea was $2.2 million, 20 percent more than a year earlier.
Numbers like those have emboldened developers including Kevin Maloney, principal at Property Markets Group, which is building a 16-story high-rise and townhouse project at 10 Sullivan St. in Soho.
“I’m not uncomfortable sitting in a project meeting saying, ‘Let’s underwrite at $3,000 a foot,’” said Maloney, whose firm co-developed the Walker Tower, along with JDS Development Group.
Units at the Soho project, which Maloney described as “family-oriented,” will start at 2,200 square feet. The four-story townhouses will have 6,000 square feet and may sell for as much as $20 million, he said.
The refurbished Hudson River Park along Tribeca’s waterfront, a soon-to-open subway hub on Fulton Street in the Financial District, and the opening two years ago of Avenues: The World School on the High Line in Chelsea are among changes that have helped lure families to downtown, said Leonard Steinberg, a luxury broker at Douglas Elliman Real Estate.
This week, Steinberg will start marketing a 12-unit condo conversion at 7 Harrison St. in Tribeca, where apartments start at $5 million for a three-bedroom unit, the smallest available. A sign-up list of people interested in seeing an apartment in the building has more than 300 names, he said.
There’s a crowd mentality at play, according to Steinberg. As new projects draw record prices, they bring more buyers willing to pay them.
“People who spend at these prices want to feel comfortable that they aren’t the only ones buying at these prices downtown,” Steinberg said. “It’s become a market that’s completely open wide for people with the ability to buy at this price point.”
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