New York City’s luxury residential real estate market has everything: the country’s most expensive listing, stunning penthouses, condos rich with amenities, vintage brownstones, contemporary townhomes and chicly updated pieds-a-terre. What it doesn’t have now is certainty. Sales cooled off in the summer (as they always do seasonally) and real estate pros are anticipating an uncertain fall due to rising interest rates and inflation, coupled with recession fears.
Despite prevailing macro-economic conditions, prime Manhattan and Brooklyn real estate remains a portfolio must-have for industry talent and power players, while up-and-comers and below-the-line buyers venture further out to red-hot Brooklyn neighborhoods like Bushwick and Bay Ridge, and outer Queens (not Staten Island just yet).
Predicting where the market will go next is difficult. Caution abounds. “It’s safe to say, whichever way the market heads, it won’t be nearly as dramatic as it has been or as dramatic as other markets,” says Sotheby’s International Realty’s Jeremy Stein of the Stein Group. He sees the market as being in neutral territory, and unlike 2021 and early 2022, neither buyers nor sellers are favored. This comes after a 16-month run that ended in May, where “the volume of sales was historic and epic,” says Stein. Blue- chip upscale properties still draw interest: His firm is representing a 5,919- square-foot penthouse in SoHo’s iconic Romanesque-Revival style Puck Building; the five-bedroom, five-and-a-half bath penthouse with more than 2,000 square feet of outdoor terraces is listed for $35 million.
“2021 was the greatest year in history of New York City real estate,” says Pamela Liebman, president and CEO of Corcoran, and not a year to benchmark for comparison, she contends (Liebman is a featured realtor in Netflix’s reality skein “Buy My House”). She points out that the city is still above 2019 sales numbers, even though climbing mortgage rates are already impacting sales. Liebman has seen an increase in interest-only loans while the luxury segment historically favors all-cash buys. “There are still bidding wars where there’s a scarcity of that type of property,” she finds, and no bargains when it comes to chasing the dream New York apartment. However, bidding wars are not the norm across the board: only 15% of deals in August closed above list price, says Liebman.
“I think people are looking — if they find what they really want, they are buying it. If there’s a lot of inventory in a certain price range, they’ll want a deal,” Liebman adds.
Buyers, she contends, can be bold; smart buyers will utilize their power right now.
She finds that talent is still considering buying in downtown Manhattan, preferably in “a sexy new development.” Penthouses continue to interest Los Angeles buyers who seek out the all-encompassing views and space for entertaining.
“Entertainment executive-types are attracted to top-of-the-line, midtown condos,” she says. Corcoran reps a triplex penthouse on three floors overlooking Central Park at 111 W. 57th. The 7,130-square-foot residence is listed for $66 million in a boutique-sized, 60-unit building that checks all the boxes: full service, plenty of amenities, privacy, views and security. Condos also hold more appeal to celebrities and other high-net- worth individuals over co-op buildings, as financial statements are not required and there are fewer rules about renting, Liebman explains.
“I think it would be an understatement to say that New York City is back: luxury renters and buyers are returning home,” finds Compass’ Carl Gambino. His experience: there may not be as many bidders on properties, but there is still a ton of activity. Year-to-date, 841 homes priced at $5 million-plus have sold in Manhattan through August, per Compass stats. These trades of luxury and ultra-luxury homes at $5 million-plus and $10 million-plus increased 35.6% in the first eight months of the year, compared to the same period last year and the first eight months of pre-pandemic 2019, notes Gambino.
Penthouses and exceptionally well-done townhomes are always in-demand, he explains. He’s representing a 1919-built, stylishly renovated, five-bedroom, four-and-a-half bath, West Village townhouse for $25 million. Jennifer Lawrence is just one nearby high-profile West Village townhome owner. Other boldface names have flocked to the prime Brooklyn enclaves of Brooklyn Heights and Cobble Hill. “Pre-war townhouses are always in favor,” says Abdul Muid, founder and principal of Ivey North, which specializes in Brooklyn real estate. “They are not building any more of them so there’s a limited supply,” he notes of the brownstones, which are loaded with architectural details and often on tree-lined, landmarked blocks.
“A year ago, if a property was priced on the button or aggressively, I got emails to view immediately,” he says. Today, inquiries come more slowly, and buyers expect more time. “All-cash buyers are still looking but sometimes wait for a price reduction,” Muid finds. Inventory is still relatively low. Those looking for value propositions consider the outer edges of Brooklyn with a lot of activity in Flatbush, East Flatbush and Canarsie. After almost 20 years selling real estate, he’s not surprised by market cycles. Ultimately, “Buyers want to see more certainty,” he notes.
Flexibility also comes into play in one the most active segments of the luxury market. Douglas Elliman Realty’s Erin Boisson Aries specializes in hotel-branded residences and the highest-end, short term rentals. The pandemic made clear the advantages of a more flexible, nomadic lifestyle. Turn-key, managed hotel residences satisfy those needs. “Everybody wants to be in New York City,” Aries says, but not everyone needs a primary or permanent residence. “These buyers want pampering, comfort and security,” she adds.
Aries is selling the Residences at the Ritz-Carlton, New York, where more than half of the 16 fully furnished penthouses have sold. Currently, a 1,848-square-foot, two-bedroom, two-and-a-half bath lists for $7.2 million. It’s rare to find penthouses with such relatively modest square footage at such height; that was intentional, explains Aries. The Residences were designed for those who want to maintain a foothold in the city without the cares and concerns of typical homeownership. “The Residences are a perfect pied-a-terre and offer extraordinary views with personalized amenities. When you leave the staff at the Ritz manages everything,” she says. Another advantage to buyers: the penthouse can be put into the Ritz’s rental pool.
The market appears to be ramping up, “We’re getting ready for a busy fall,” says Aries. Creating a media sensation: Ryan Serhant’s listing of the $250 million, 17,545-square-foot triplex penthouse atop Central Park Tower and 1,416 feet above the city—the highest residence in the world. Other real estate pros are rooting for Serhant to achieve the approximately $14,249 per square foot listing price.
Sotheby International’s Stein expects New York’s “still undervalued” market to bounce back within a year so. “2015 was the peak: we will get back there at some point,” Stein says, citing residential real estate’s inherently cyclical nature. “New York is always a real estate goal,” he adds. As Corcoran’s Liebman notes, the market is solid: “New York is one of the world’s capitals. People still want to have a piece of real estate here.”
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