NEW YORK / Bloomberg
At the very top of his newly constructed condo tower in SoHo, developer Kevin Maloney saw a problem: a triplex penthouse priced at $45 million that he knew wouldn’t sell in a Manhattan market where luxury deals are slowing.
So he ripped up the floor plan and chopped the apartment with about 8,400 square feet of space into two more-manageable units. Had the building, at 10 Sullivan St., not been almost complete, he would have carved the penthouse into three, he said.
“We thought it was too expensive for the market and where the market was,” Maloney, principal and founder at Property Markets Group, said in an interview. “The air is very thin up there in that buyer pool.”
The changes will create a 3,000-square-foot apartment spanning the 15th floor, priced at $11 million, and a 5,400-square-foot duplex above it, for $29.5 million, Maloney said. With that strategy, “the buyer pool widens — maybe not significantly, but certainly more than at $45 million.”
Manhattan’s luxury-condo boom, symbolized by record-setting price tags for extra-large and lavish penthouses, is idling while inventory swells and demand from global investors slackens. Four years after a duplex at Extell Development Co.’s One57 found a buyer for $100.5 million, Manhattan investors who want a trophy home in the sky have many to choose from. Chetrit Group has priced its planned 21,500-square-foot triplex atop the former Sony building at $150 million. Zeckendorf Development LLC is asking $130 million for a penthouse at 520 Park Ave. A Jean Nouvel-designed skyscraper next to the Museum of Modern Art has a duplex for more than $70 million spanning its upper floors.
Those aren’t even reflected yet in listings on StreetEasy. The real estate website shows at least 13 other newly constructed penthouses for at least $20 million that are being officially offered for sale. All but two have spent more than 100 days on the market. Among them is a 7,000-square-foot penthouse at Toll Brothers Inc.’s 1110 Park Ave. with a $29.5 million price tag — a 16 percent cut since its listing in January 2015. At Aby Rosen’s 100 E. 53rd St., designed by Norman Foster, a four-bedroom penthouse was listed just last month for $65 million.
Builders starting projects today are already incorporating smaller units into their planning. It’s also a sign of the times that those whose projects are near completion are revisiting whether some of their units, designed years earlier, are too large or expensive for today’s luxury-buyer appetites, said Nancy Packes, a marketing and design consultant to New York residential builders. “It’s called getting ahead of the curve,” Packes said. “It’s not merely breaking the penthouse into smaller units and lowering the absolute price, it’s shortening the time necessary to sell the units.”
Luxury markets around the world are also facing pressures. In London, a higher sales tax imposed on the most-expensive properties has damped demand for high-end units and is forcing developers to reassess plans to build any more.