I received a lot of passionate feedback from last week’s Padkos. It seems that I touched on a nerve. What was interesting to me was how different the responses were. There are a lot of opinions and a lot of emotions about where our city is right now. In my 30 years as a New York resident, I’ve never seen less consensus on the future of New York City.
This week, I spent time speaking with different agents to get a pulse on the market. Weekly company Zoom calls are fine, but we all miss the value that FaceTime gives us. Some of the biggest deals I’ve done in my career started at the water cooler. It also doesn’t help that our industry lacks one reliable data source that tracks real-time information. There is no Nasdaq for apartment sales, so there’s little transparency. Every brokerage company publishes a quarterly report, but none of its results are the same. Darrell Huff’s 1954 book (recommended by Bill Gates) “How to Lie with Statistics” has never been more relevant than it is today.
If you rely on the press, the smorgasbord of stories will leave you even more confused about the state of the market. The information that “makes print” is usually pitched by agents who want to be featured, so they reflect a bias point of view. The other stories feature a celebrity or some sensational anecdote. They are rarely about actual real estate at all.
In the past month, three big-ticket penthouses downtown sold and made the news. However, the articles they wrote missed the nuances and backstory that said so much about these luxury residential markets.
At Zaha Hadid’s project on 28th Street, the penthouse went into contract for less than 50% off the $50M asking price. The asking price was a reach in a frothy market, but this contract and its price was a significant deal in any market given it was one of the highest-priced sales ever in West Chelsea. Pioneering.
The penthouse at Walker Tower sold for less than 50% of the previous owner’s closed price. The press had a field day with the drama and history of this unit. However, what the reporters missed is that this will still be one of downtown’s most significant sales of the year.
The penthouse at 421 Broome Street sold for $35M, which is less than the price per SF for the sale of the PH at 150 Wooster Street from two years ago, but still a big number.
Yes, all three of these penthouses would have sold for a higher price in a more robust market, but these are good first signs of recovery for the luxury sector. This part of the market is essential to the city as it brings in much-needed activity and critical tax revenue. It’s a hopeful sign.
So yes, there are deals to be had in luxury real estate. The smart ones realize that New York never stays down for long, and they are getting in now. The prices will bounce back – the question is not if, but when. If you are waiting for a better time to invest in this city, you can’t wait – this is it.
Let’s do this!
-Shaun