A property developer who's designed multimillion-dollar NYC penthouses says there are 2 major surprises in the luxury real-estate market right now
- Luxury real estate in New York City isn't selling, a New York-based developer and architect told Mansion Global.
- That's not the only thing he finds surprising: Gimmicks, he said, are being used to sell luxury property, and it's working.
- It's part of a larger trend in which luxury apartment buildings are going to greater lengths to attract tenants by offering over-the-top amenities.
In the world of New York City real estate, luxury is lingering on the market a hair too long.
"Nothing's selling," Cary Tamarkin, New York City developer and architect of Tamarkin Co., told Mansion Global when asked what the biggest surprise is in the luxury real estate market right now. Tamarkin's designs include a luxury condo in the Upper West Side with penthouses worth $18 million and $22.5 million, reported The Real Deal.
"No one has a crystal ball, so there's always a cycle at the end of the development. Sometimes you're pleasantly surprised, sometimes you're not," he said.
According to The Real Deal, supply outweighing demand is the culprit behind the slowdown of the city's luxury real-estate market.
Just consider New York's surplus of penthouses. Many have been sitting on the market for months, even years, and eventually receive a drastic price cut or are carved into two smaller apartments, Business Insider's Katie Warren previously reported.
"Like any commodity, when the market is saturated with them, their value declines," Jason Haber, an agent at Warburg Realty in Manhattan, told Warren. "If under every rock you found a diamond, diamonds would decline in value. That's what is happening right now."
More than half of luxury homes in Manhattan - priced at $4 million or above - were sold at discounted prices in the first five months of 2018, Warren wrote, citing Mansion Global. And at 432 Park Avenue, New York City's tallest residential building, a 95th-floor penthouse listed for $82 million was split into two apartments, 95A and 95B, for $41.25 million and $40.75 million, respectively, after being on the market for two-plus years, Curbed reported.
Efforts to get luxury properties off the market have continued into 2019: A SoHo triplex penthouse was slashed from $65 million to $59.5 million, Warren reported in another article.
But it's not just penthouses. A townhouse on the Upper East Side, dubbed "Versailles in Manhattan," has been on and off the market for 15 years. Its highest asking price was $35 million, but in May, it was slashed to $19.75 million by Douglas Elliman and Corcoran.
Luxury apartments are using 'gimmicky' perks and amenities to attract buyers
That doesn't mean that luxury buyers aren't being enticed, though. There's just a new way of swaying them and it involves wild perks.
"I was surprised by the Annabelle Selldorf building [on the Far West Side in Manhattan] with the cars that go up to your apartment," Tamarkin said. "It felt gimmicky and I was surprised that it worked so well. When people started using international starchitects, I was surprised that that worked to sell apartments."
It's a similar tactic to those used in an $85 million Hell's Kitchen condo, which comes with tickets to outer space and a couple of Rolls-Royces.
Read more: 8 of the craziest perks we've seen in luxury real estate listings
These gimmicks are part of a larger trend in which luxury apartment buildings are going to greater lengths to attract tenants by offering increasingly lavish amenities. Think rooftop running tracks and dog parks, outdoor movie theaters, and residents-only bars and restaurants.
And the trend is not unique to New York City.
In Miami, one luxury building provided its residents with Tesla-driving chauffeurs. In Baltimore, 414 Light Street is also loaded with amenities, including an al fresco dining space, yoga and meditation room, and business lounge. And Oceanwide Plaza in Los Angeles, a three-tower development, will feature a two-acre "sky park" with two dog parks, a basketball court, lawns, a swimming pool, and a running track.
That's not surprising considering New York also isn't the only city where luxury isn't selling - an LA mega-mansion listed at $250 million recently received a price cut of $100 million, and it's still on the market.