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May 2023 sets luxury record in Manhattan

Ready for some good news? The most active price range in New York City is $700,000 to $1.6M. That indicates that determined buyers at all levels have not been held back by mortgage rates.

Further, the numbers reveal substantial competition in this market segment, but not near the levels happening in the luxury market.

Across all market segments, well-priced quality inventory will spark multiple interested buyers. Some pundits describe this as a buyers’ market, but for appropriately priced high-quality inventory, it’s very much a sellers’ market. I know that sounds inconclusive on the surface, but hear me out. This is a solid market for strong deals, especially if you’re aiming to sell and own a well-renovated, well-located property. And if you’re looking to buy, you should get in this market now so you don’t miss out on the property that’s right for you. Well-priced inventory in the luxury and other markets in Manhattan is selling -- and often as the result of a bidding war.

Luxury residential real estate operates a bit differently than the regular market. Although overall sales have been impacted by climbing mortgage rates and persistent inflation, top-tier real estate remains a must for NYC power players. “There are still bidding wars where there’s a scarcity of that type of property,” said Pamela Liebman, President and CEO of the Corcoran Group. She finds that no bargains are being made among her clients when it comes to chasing their dream New York apartment.

Jeremy Stein of Sotheby’s International Realty believes the luxury market in 2023 is entering neutral territory, unlike in 2021 and early 2022, the market is favoring neither buyers nor sellers. “It’s safe to say, whichever way the market heads,” Stein said. “It won’t be nearly as dramatic as it has been.”

Market Activity and Where it is Hottest:

Year to date, 2023 spring sale levels in the Manhattan luxury market have been the highest since the 2008 financial crisis, excluding 2021-2022. For example, the first week of May 2023 delivered the most luxury contracts signed since the first week of May 2022. In the NYC luxury market, condo transactions remain the dominant force, but co-ops and townhouses are making strong showings as well, with cash buyers still leading the charge.

Chelsea, Tribeca and Noho currently rank as three of Manhattan’s most desirable and hottest areas, with Tribeca and Noho holding the title of the most-expensive neighborhoods. Based on the median listing price, some of the priciest New York City residential real estate can be found in downtown Manhattan’s 10013 zip code, a neighborhood known for its many spectacular warehouse conversions – and ample square footage. Noho in lower Manhattan, with a median sales price of $3.27 million, rates as one of the top-two, most-expensive neighborhoods in NYC. Noho’s prime location in the heart of downtown makes it a popular destination with buyers. The area also benefits from a classic combination of high demand and low inventory. Most apartments for sale in Noho feature lots of character, including high ceilings that are often beamed, and exposed brick. Bond Street is lined with luxury buildings, and amongst the neighborhood’s other hot new development properties is 40 Bleecker Street. 40 Bleecker was designed to look modern and feature the quality and distinction of buildings made a century ago. Its curated, first-class amenities include a swimming pool, state-of-the-art exercise room and stretching studio, 24-hour concierge, and a courtyard with waterfalls and reflecting pools, as well as below-ground private parking.

In Tribeca, historic lofts with unique floor plans and “Tribeca character” remain desirable, but luxury new development condos are in high demand. Condos for sale in these buildings are expected to shatter price records for lower Manhattan. Properties include new high-rise towers such as 450 Washington and 108 Leonard. The latter also melds historic and modern architecture and design, and offers such amenities as rooftop gardens, an indoor pool, a fitness center, and a playroom. Other notable condo buildings include 111 Murray Street. It brought together the talents of Kohn Pedersen Fox, David Mann, David Rockwell, and Edmund Hollander, and features curved crystalline façade unique to city’s skyline. The Noble Black team is currently representing 111 Murray Street PH2 a magnificent, full-floor residence that boasts five bedrooms and 12-foot ceilings.

Up and coming hot neighborhoods such as the Lower East Side are leading the charge with properties like One Essex Crossing and 199 Chrystie Street. One Essex Crossing features 83 residences (studios to three bedrooms and penthouses), and a façade that weaves together panels of warm brick and Italian terracotta. 199 Chrystie Street is comprised of 14 interlocking villas brought to vivid life by internationally renowned designer, Thomas Juul-Hansen. The villas span from 1-, 2-, and 3-bedroom units to a pair of 6-bedroom penthouses with large terraces, one of which features a private roof terrace that includes a fire pit, outdoor kitchen, and plunge pool.

International Buyers:

International buyers comprise a substantial portion of the market’s cash transaction – as pieds-a-terre, investments, and often as homes for their children who attend New York City schools. The parents purchasing for children favor new development projects, with buyers seeking a studio or a 2-bedroom (if their child will have a roommate), or sometimes a larger 4- to 5-bedroom unit for when the family visits. According to Nikki Field, with The Field Team at Sotheby’s International, all signs point to a long-awaited tide of international buyers once again driving momentum behind Manhattan’s flourishing residential market. The broker says that a stream of foreign buyers bolstered her business in the second half of 2022 and into the first few months of this year, as mortgage rates slowed market segments of domestic activity in the city. “The big, huge, massive advantage to Manhattan real estate in the third and fourth quarter is that international buyers started coming back,” Field said. “We know through all of our market crises in the past, historically, the international buyer is our savior.”

Office to Luxury Conversions:

Narratives regarding commercial to residential conversions have been peppering the news lately and piquing people’s curiosity. That’s completely understandable, as it seems like this is a tidy and convenient solution to two problems that plague Manhattan: excessive office space and a housing shortage. High-density cities like Manhattan have areas with concentrated numbers of office buildings, “Many of which have outdated infrastructure and technology -- located at the very heart,” Mark Johanson of BBC noted last year. Anyone thinking that this will have a significant impact on the housing shortage may be disappointed, as this will mostly benefit Manhattan luxury buyers. According to CBRE, conversions will represent just “2% of the overall office market” and they are a “niche trend” limited to precise markets, the NYC luxury market being one of these.

Successful luxury conversions thus far have been One Wall Street. The landmarked Art Deco jewel in the financial district has seen an absolute rebirth as this Ralph Walker-designed exceptional property has re-emerged as a unique luxury residential property with 566 units. That’s typical of office conversions in the Financial District, where there are no affordability requirements, which makes it more profitable for building owners to take on expensive conversions. And 25 Water St. promises to be the next successful downtown office to luxury conversion.

“More than 1,300 apartments will fill an empty office building in Lower Manhattan, making it the biggest residential conversion project in the country,” the owners of 25 Water Street say. The owners are applying decades-old rules that ease residential conversions in the Financial District to carve out courtyards, and add 10 floors to the 22-story structure. The residential plan has not yet been submitted for final approval from the city’s Department of Buildings, but city signoff is a formality in Lower Manhattan office conversions as long as the new design meets zoning and construction rules.

It’s worth noting that the Manhattan luxury market has lost much of its traditional seasonality. This is mostly due to the broad range of inventory and the fact that the studios and 1-bedrooms are typically not part of the school-year buying rush. Nevertheless, this current market feels like spring. We still have low enough inventory levels that the expected flurry of spring buyers has caused a transaction surge. The influx of domestic (both out-of-towner and local Manhattanites) and international buyers, combined with an anticipated though not abundant spring inventory flow, is fueling the surge and presenting opportunities for buyers and sellers alike.

That said, the demand for high-quality properties, and especially new development inventory, exceeds supply. Supply will most likely remain a five-year matter, so prices in this market segment are not going down. It’s important to keep that in mind. Also, the overload of inflammatory discussion about real estate in the world right now is giving some people pause. Don’t let it. The waiting game will backfire on you in this market. If you want to buy in Manhattan now, then buy… now!

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