A two-story penthouse in One57-a glass tower that will be New York City's tallest residential high-rise when it opens next year-recently sold for $90 million, setting a new record for the city's residential real estate market.
The sale closed in May before the unit's floors were framed, let alone built. And even though the penthouse will sit on the 89th and 90th floors, overlooking Central Park, it's not even the most expensive unit in the soaring glass tower.
The sale illustrates how strong the demand has been among the ultra-wealthy for living space in the hot and glitzy tower, even at a time when the rest of the nation's housing market remains largely moribund and the overall economy continues to sputter.
At about the time it was striking new ground in Manhattan residential sale prices, Extell Development announced One57 had reached $1 billion in sales. The building, whose lowest-priced units start at around $3.2 million, was half sold within six months after presales started last November.
"We're seeing buyers from as far away as Hong Kong," says Gary Barnett, president of Extell Development Company, which is building One57 in Midtown Manhattan, across from the world-renowned Carnegie Hall. "Our buyers are visionaries who recognize the building's value and are confident enough to buy off of floor plans at premium prices."
Located on West 57th Street between Avenue of the Americas and Seventh Avenue, One57 is changing the city's landscape more than just visually. It is also making a mark because of its prices, its aesthetics and its impact on the city's real estate market, observers say.
"Because of One57, you're going to see a lot more high-end condos going up," says Jason Sheftell, real estate editor at the New York Daily News. The decline of the euro has helped fuel interest in the city's luxury market across the globe, he adds. "For those looking for somewhere good to buy real estate, that means New York City right now."
Extell has done more than simply provide floor plans to sell its space. The building's sales gallery is just two blocks up from where One57's skeleton is reaching into the sky and starting to get its glass skin. Located on the second floor of the Fuller Building at East 57th Street and Madison Avenue, the gallery gives prospective buyers a glimpse into what it will be like living in a 1,004-foot skyscraper.
The sales center provides a high-tech, multimedia and concrete exploration of both the inside and outside of a building that is gradually carving its own niche in the iconic New York City skyline, starting with the tall black doors into the gallery that replicate One57's entrance. The gallery includes a scale-model of the building, with its floors lighting up as Extell Sales Director Dan Tubb describes their sizes, views and prices. It will house 92 condominiums in all.
The lowest residential tiers start on the 39th floor-a 210-room Park Hyatt hotel will occupy the lowest 27 floors-and will house units with one to four bedrooms, ranging in size from a little more than 1,000 square feet to about 3,500 square feet. In the next tier up, residences will cover half of a floor. For example, the three-bedroom, three-and-a-half-bath, 4,200-square-foot units will have ceilings more than 11 feet high and a great room with northern views of Central Park and southern views of downtown Manhattan. The prices for these start at $10.7 million.
The top-tier residences will each take up an entire floor. These will cover more than 6,200 square feet, with four bedrooms and five and a half bathrooms. The grand salon will have three distinct views; so will the master bedroom suite, which also will have a dual master bath-his and hers toilet closets. Prices for these units hover around $57 million.
While the top penthouse will have the highest view, the "high-living" bragging rights will actually belong to the owner of the lower penthouse, on floors 75 and 76. It will measure 13,500 square feet, with six bedrooms and seven and a half baths, with a fully enclosed, climate-controlled, dual-level winter garden or pool, whichever the owner prefers. The asking price: $115 million.
While prices for real estate in much of the rest of the country continue to drop, Extell has raised its asking prices. The lower penthouse, for instance, originally was listing for $110 million.
While these prices seem to soar as high as the building itself, real estate industry observers say they are reasonable when compared to the rest of the New York City luxury residential market. For instance, Sanford I. Weill, the former chairman and chief executive of Citigroup Inc., sold his penthouse at 15 Central Park West, a few blocks north of One57, last February for what was at the time a record, $88 million. One57's upper penthouse, covering nearly 11,000 square feet, sold for $2 million more, but its price per square foot was less-$8,240 versus $13,000 for the Weill penthouse.
"When you consider the dollar-per-square-foot price, it's very efficient," Tubb says. "It's lower than much of the retail market right now." And for $9,000 or $10,000 per square foot, the views are far superior, he adds. "The floor plans are resonating with buyers," Tubb says. "The price point is resonating."
When completed next year, One57 will be the sixth- or seventh-tallest building in the city, depending on whether the height of antennae or radio towers are included. (One57 will have neither.) It will eclipse the dark glass Metropolitan Tower (716 feet) and brick Carnegie Hall Tower (757 feet) across the street, as well as the domed CitySpire Center (814 feet), a block away.
Securing The View
Extell's tower is usurping some of the views of Central Park that those in the Met Tower used to enjoy. To try to prevent its buyers from suffering a similar fate, at least to the east and west, Extell purchased some air rights in those directions, says Tubb. To the east, the view includes the East River, the borough of Queens and the Citigroup Center. To the west lie the Hudson River, New Jersey and the Time Warner Center towers. The southern view includes the Empire State Building, the Chrysler Building and the still-under-construction Freedom Tower. From the upper floors, the Statue of Liberty is visible as you look south. The view that One57's sales force is touting is the one that lies to the north-of the expanse of grass, trees and ponds offered by New York City's iconic Central Park. The red neon sign atop the 42-story art deco Essex House hotel on Central Park South obstructs the park view from One57's lower levels, but higher up, the high-rise's views of the park are unobstructed.
"There's never been a building of this caliber with this view of the park," Tubb says.
The building is meant to give the impression of a cascading waterfall that seems to emanate from the heavens, according to Extell. Its multi-shaded pixelated blue glass will reflect the different hues of the sky and clouds, giving the illusion of fluidity.
Christian de Portzamparc, a Frenchman who won the prestigious Pritzker Architecture Prize at age 50, designed the building. His creations include The City of Music in Paris and Hergé Museum in Louvain-la-Neuve, Belgium. De Portzamparc also designed the postmodern glass LVMH Tower a few blocks up on East 57th Street, where a Christian Dior boutique is located. The interiors of the residences are the work of another top architect, Thomas Juul-Hansen. Born in Denmark, Juul-Hansen specializes in sophisticated modern luxury. His floor plans are designed to emphasize space and openness, with rich finishes meant as an "expression of discreet opulence," according to Extell.
The windows in each of the units stretch from floor to ceiling, a design meant to highlight the expansive views of the city. In the penthouses, the view will be something of a vista, with windows spanning to a width of as much as 23 feet.
A Range Of Options
Owners who purchase off a floor plan have the luxury of choosing between rosewood and white oak flooring, as well as personalizing their kitchen and bathrooms. Larger units have kitchens with a double dose of appliances, including two refrigerators, two ovens, two dishwashers and two stoves that vent directly to the outside of the building. They also include a wine cooler and a built-in coffeemaker that grinds the beans for each cup individually. Juul-Hansen designed the silver handles on all the kitchen cabinetry.
The master bathrooms, meanwhile, have heated floors that, along with the walls, are made of polished Italian marble slab. The bathrooms on the upper floors include his and hers water closets, flat screen TVs and, on the full-floor residences, bathtubs carved out of single pieces of stone.
The units are designed to keep out the noises of the city and surrounding units, with concrete floors from 10 inches to 12 inches thick. The penthouses each will have private elevators that go from the living areas to the sleeping areas and a dual-level grand salon overlooking the park. The upper penthouse will have four wood-burning fireplaces.
The lower penthouse has one of the more unique features in the high-rise: a climate-controlled winter garden room with a 25-foot-high glass roof.
The sales gallery includes replicas of many of the rooms that will be available in the units, including two full kitchens, one done in each color wood. The sitting room includes a large curved screen that displays some of the panoramic views that will be available from atop the building, which Extell captured by flying unmanned drones.
"The drones were very important to enable the buyer to get a true sense of what the views will be," Tubb says.
The galleries allow buyers to see everything they are purchasing more than a year before the tower opens next year, according to Extell. The building is expected to top off some time in July and the first closings should occur in mid-2013.
Residence owners will have a separate entrance and lobby from that of the hotel, but they will be able to use the Hyatt's 65-foot pool, located in a three-story-tall space 300 feet above street level, with a mezzanine spa and gym. There will also be a private, residents-only gym and a range of concierge services.
Common charges range from $1.30 to $1.60 per square foot per month and are slightly higher for the full-floor residences and the penthouses. Additionally, the condominiums will receive 10-year tax abatements under New York's 421-a tax exemption program. Tax obligations will be reduced for condo owners the first year, and increase gradually over a decade until reaching the normal amount.
New York City has the most expensive housing in the United States, with an average home price that exceeds $1 million. The lowest-priced units in One57 started at $3.2 million for a one-bedroom, 1,020-square-foot unit and those sold out quickly. In early May, the smallest unit left was a $7.4 million two-bedroom.
One reason demand has been so strong is that there is not a lot of inventory in the ultra-high-end market, observers say.
"Brokers say they are getting more calls about apartments in the $50 million range than they are about apartments in the $5 million range," Sheftell says.
Plus, those looking for a status address are willing to pay.
The city saw another record set in May with the sale of a 10,000-square-foot duplex at 740 Park Avenue-an address that both John D. Rockefeller Jr. and Jacqueline Kennedy Onassis called home-on the Upper East Side for $52.5 million, the most ever paid for a co-op. That same week, casino owner Steve Wynn paid $70 million for a duplex penthouse at The Ritz-Carlton on Central Park South.
The sale in the same week of three properties, within 15 blocks of one another, for a total of $212.5 million is something that's going to be hard to match, Sheftell says.
"I was blown away by it," he says.
The area around Central Park has some of the most coveted residential locations in the city. In addition to the park and Carnegie Hall, the Plaza District is home to Lincoln Center, the Museum of Modern Art and the Metropolitan Museum of Art, numerous art galleries and restaurants and some of the world's most exclusive shops, including Van Cleef & Arpels, Tiffany & Co. and Bergdorf Goodman.
There has also been very little new residential development in the city over the last few years, in part because of the economic downturn.
One57 itself is more than a decade in the making. Extell began buying the properties that make up the site in the late 1990s. The tower sits on what had been several different parcels, including a deli and an umbrella shop, and there were about 10 different transactions involved, Tubb says. The company broke ground on the $1.4 billion tower last year.
So far, it's been an easy sell.
"People are going in, seeing the unit, and putting checks down, just like that," Sheftell says.
"Demand is very strong both domestically and internationally, where there's a lot of liquid cash," Tubb agrees. "They see the New York market as very stable in the long term."
Extell's residential portfolio includes 535 West End Avenue, The Lucida and The Avery in Manhattan. The company has also restored and updated a number of buildings in landmark neighborhoods, including the former Stanhope Hotel at 995 Fifth Ave. and The Belnord on the Upper West Side. Its commercial developments include the W Times Square hotel in New York City and the $200 million redevelopment of Chicago's Insurance Exchange.
New York City-Wall Street, more specifically-was in some ways the epicenter of the economic downturn. Planning for One57 took place during the depths of the financial meltdown in 2008 and 2009. Despite that, Extell went ahead with its plans to build a glass tower, with units starting at $3 million apiece.
"Gary Barnett, the head of Extell, is a real cowboy. He takes chances," says Sheftell. "And they pay off."
No Recession In NYC Housing Market
Anxious buyers lining up ours in advance for an open house, ready to write deposit checks for an apartment they have not even seen. Couples in bidding wars, offering as much as 35% over the asking price.
While much of the nation's housing market remains depressed, these scenes are typical anywhere in Manhattan where luxury housing is for sale.
"This spring has been just incredible for all of us," says Fredrick Eklund, managing director of Prudential Douglas Elliman and a cast member of Bravo's Million Dollar Listing New York reality show. "It's surprising to me to see just how much cash has been sitting on the sidelines for so long."
Nationally, the real estate market for high-end homes fared far better than the rest of the market, and compared with the rest of the country, the market in the city that never sleeps took probably the shortest nap.
"New York certainly did take a little bit of a hit; it was probably the last metropolitan area to be hit," says Jeffrey Rogers, president and chief operating officer of Integra Realty Resources. "Manhattan is not for everyone, but overall, for the amount of money you're willing to spend, it's the most desirable place in the U.S. to live or have a home. … If you want to be at the top of the game, you have to be in New York."
Of those areas with large concentrations of ultra-expensive properties, Southern Florida has probably suffered the most over the past four years, according to real estate experts. Rogers estimated high-end housing values remain down as much as 40% from the peak in that state, although that is still better than the rock bottom of a few years ago. The main problem in Florida and elsewhere is a glut of properties due to overbuilding.
"All the coastal cities are still trying to recover," he says. "Back in 2010, we saw a lot of international investment in Florida, especially from Canada, but as the recovery was not very robust, that dropped off."
Southern California felt the downturn as well.
Dana Treister, a real estate attorney with Greenberg Traurig in Los Angeles, says the problems with properties there were a function both of timing and location. For instance, after the Staples Center opened in downtown L.A., a slew of high-end luxury condominium developments followed in the early- to mid-2000s and there just wasn't the kind of demand that had been anticipated.
"Downtown Los Angeles just built up too fast, and it was largely urban professionals moving in who couldn't afford the prices," Treister says.
On the other hand, areas like the Pacific Palisades, Beverly Hills, Pasadena and West Hollywood saw much smaller drops in value-about 10%. Any reductions are now at least back to 2007 levels.
What happened to ultra-high-end properties in Southern California, which typically sell to people in the entertainment industry, tends to be true for high-priced homes wherever they are: They continued to fare relatively well throughout the recession because there are not as many properties in this class and because the buyers can afford to not worry about the economic ills that concern everyone else."When you can afford to buy a home for $10 million, you're not as sensitive to the changes in the economy, so those kind of properties are still holding up-though there aren't as many of those homes," Treister says.
That's what happened in New York City, where within the last six months several sales records were broken, and then broken again.
"New York responded very differently than the rest of the country" to the economic crisis, says Hall Willkie, president of Brown Harris Stevens in Manhattan. "It is unique. It's a world capital. There is a great deal of demand and never a lot of supply."
Brown Harris Stevens represented both buyer and seller in the first record-breaking sale: A Russian billionaire bought a 6,700-square-foot penthouse on Central Park West last February for $88 million, shattering the prior record of $53 million, set in 2006. While the penthouse at One57 sold three months later for $2 million more, or $90 million total, the Central Park West apartment formerly owned by Sanford Weill, founder of Citigroup, still cost more per square foot-$13,000.
"Very unique properties, trophy properties, have done extremely well," Willkie says.
Manhattan never had the kind of overbuilding that other areas did, according to real estate experts. In fact, many say there remains a dearth of true status properties in the city, as over the last several years it was virtually impossible to get financing to put new buildings up.
Only about 30% of New York City properties are owned, and 70% of those are co-ops, which restrict the amount of financing a buyer can use, particularly in higher-end units, Willkie says. That naturally restricts sales.
"You're looking at homes where people have tremendous equity," he says. "There were so many cases of people who owed more than their home was worth; that's just not going to happen in Manhattan. When you have more equity in your home, you respond very differently in down economic times."
Supply aside, there's simply also more demand for luxury apartments in Manhattan, say brokers, and they swear it's not just local pride driving them to talk up the Big Apple. New York City truly remains the place to own a residence for anyone who's anyone, including wealthy Chinese, Russians, Latin Americans and Europeans, they say.
"It doesn't matter how much money you have," as Eklund put it, "you're not really, truly successful until you own an apartment in New York."
