The super-luxury condo developer is waiting to open sales in the 800-condo building up to U.S. customers until early next year.
Gary Barnett, the developer who sold New York’s most expensive apartment, is marketing his newest and largest Manhattan condo project to Asian buyers first—with prices well below those at his Billionaires’ Row towers.
Barnett’s Extell Development Co. will start sales of the more than 800 condominiums at his Lower East Side property exclusively overseas, including in China, Malaysia and Singapore, he said in an interview. Apartments at the 80-story tower, called One Manhattan Square, won’t be for sale in the U.S until early next year.
They also won’t be breaking any price records. Barnett estimates that most of the One Manhattan Square condos will be listed at $1 million to $3 million. Homes in that range are in short supply in Manhattan, where developers—including Extell—have focused almost exclusively on building larger and lavish apartments aimed at ultra-wealthy buyers who view New York real estate as a haven for cash.
“We think that’s a reasonable place to be,” Barnett said of the One Manhattan Square pricing. “There are a tremendous amount of people who would like to own something in New York City but are priced out because everybody’s building super-luxury.”
It was Barnett himself who ignited the development boom of high-end homes with the construction of One57, the 1,004-foot skyscraper across from Carnegie Hall on Manhattan’s west side. Extell began work on that project, planned as the city’s tallest residential tower, less than a year after the bankruptcy of Lehman Brothers Holdings Inc. ushered in a real estate downturn.
The building reached $1 billion in sales after six months, including a contract to buy a penthouse for $100.5 million, the highest price ever paid for an apartment in New York history. That deal closed last year.
Construction boom
Other builders followed suit. Now at least eight residential properties aimed at multimillionaires—including Zeckendorf Development Co.’s 520 Park Ave., Vornado Realty Trust’s 220 Central Park South and another tower by Extell about one block from One57—are under construction in or near Midtown, with the 57th Street corridor being dubbed Billionaires’ Row. Manhattan prices overall reached a record of $1,497 a square foot in the third quarter, according to Miller Samuel Inc. and Douglas Elliman Real Estate.
While expensive homes are still drawing interest, the greater demand from places like Asia is for less pricey offerings, of which there aren’t many, Barnett said. Extell, which usually doesn’t outsource the sales and marketing of its properties, has hired Jones Lang LaSalle Inc. to sell One Manhattan Square’s units internationally, with exhibitions planned next month in Shanghai, Hong Kong, Beijing, Singapore and Kuala Lumpur.
“There’s a tremendous hunger to purchase in New York for investment or for living or for safety or for a pied-a-terre,” Barnett said. “It’s hard to find something which is a good value and that more people can afford.”
The project at 252 South St., about a mile from New York’s Chinatown, will be the largest ever for Extell by number of units, he said. The complex will have 50,000 square feet of indoor amenities that will include art studios for residents. Another 40,000 square feet of outdoor space will feature landscaped gardens and a “tea pavilion,” he said. The tower, which will be complete at the end of 2018, also will include smaller units, he said.
“There nothing really that’s crazy expensive,” Barnett said.
Land deal
The firm agreed to buy the land, near the Manhattan Bridge and the East River, in January 2012 for $103.5 million, according to public records. The timing of that site purchase—ahead of a spike in land prices brought about by the latest construction boom—is what enables Extell to offer apartments there at lower price points.
“He was the first out of the box after the financial crisis to market super-luxury,” Jonathan Miller, president of Miller Samuel, said of Barnett. “If you take him to be a market leader, this is recognition of the next wave—when it’s possible for developers.”
HFZ Capital Group’s Ziel Feldman and homebuilder Toll Brothers Inc. have also announced plans to build less pricey condos as a way of satisfying a shortage in the Manhattan market.
For Extell, lower price points are a good strategy to attract buyers in China, after a currency devaluation in August made the cost of buying homes in the U.S. more expensive, Miller said. The devaluation, and the prospect of another, probably increased the appetite of buyers in the country, said Miller, who recently traveled to Shanghai to give presentations to real estate investors.
On New York listings website StreetEasy, page views originating from China more than doubled in July from a year earlier. That was the same month that China’s security regulator banned major shareholders from selling stakes in listed companies for half a year.
“That just makes people more anxious to invest in a stable and secure and economically vibrant country,” Barnett said. “The United States fits the bill and New York City tops the list. We haven’t seen any slowdown in demand at all.”