- New York City has a surplus of exorbitantly expensive, ultra-luxury penthouses.
- Many of them sit on the market for months and are eventually sold at heavily discounted prices.
- But some real estate companies take more drastic measures and split these massive penthouses into multiple smaller, cheaper units to get them off the market - and often, it works.
New York City has more super-expensive and ultra-luxurious penthouse apartments than it knows what to do with.
Many of these penthouses sit on the market for months or years and eventually get significant price chops. In the first five months of 2018, 58.6% of luxury homes - priced at $4 million or above - sold in Manhattan were let go at discounted prices, according to an analysis of StreetEasy data by Mansion Global.
"Like any commodity, when the market is saturated with them, their value declines," Jason Haber, an agent at Warburg Realty in Manhattan, told Business Insider. "If under every rock you found a diamond, diamonds would decline in value. That's what is happening right now."
Other sellers offer wild perks to sell their extravagant penthouses, such as the $85 million Hell's Kitchen condo that comes with tickets to outer space and a couple of Rolls Royce luxury cars.
But sometimes discounts and perks are still not enough, and with the traditional penthouse losing its allure for many buyers, developers are carving up penthouses into multiple cheaper listings to get them off the market.
Reuters
An $82 million penthouse in NYC's tallest residential building was split into two nearly identical units.
At 432 Park Avenue, New York City's tallest residential building, the 95th-floor penthouse was originally listed for $82 million for the full floor, but it sat on the market for more than two years. But as of December 2018, it's on the market as two separate listings - penthouse 95A for $41.25 million and penthouse 95B for $40.75 million, as Curbed reported. One faces north and one faces south, but the layouts aren't much different.
And just a few blocks away at 520 Park Avenue, the developers split a 12,398-square-foot triplex penthouse, first listed in 2014 for a staggering $130 million, into two separate units: One simplex listed for $40 million and one duplex penthouse asking between $80 million and $100 million, according to The Real Deal.
The Real Deal pointed to this as part of a trend of "developers opting to split once-massive penthouses into two or more smaller units."
If past sales are any indication, this strategy might be a good one.
Back in 2016, a 12,00-square-foot, $80 million penthouse at 160 Leroy Street in the West Village was split into two smaller units: One asking $31.5 million and the other $48.5 million, according to Curbed. And it worked - the cheaper one sold in 2017 and Michael Rubin, part owner of Philadelphia's 76ers and the New Jersey Devils, bought the larger unit in 2018 for $43.5 million, Forbes reported.