NYC has more penthouses available than it can fill - and it suggests a change in the way wealthy people are looking at luxury real estate
- These days, many rich New Yorkers don't seem to care about the prestige of living in a penthouse apartment.
- New York City is seeing an overabundance of penthouse units on the market, with a 16% uptick in listings in October 2018 as compared to the year before.
- The surplus means that real estate agents are considering offers well below asking price, according to Jason Haber of Warburg Realty.
- And these days, "not everyone needs a penthouse to feel like they got the trophy," Reba Miller, a broker at Berkshire Hathaway HomeServices, told The Real Deal.
The penthouse apartment, which occupies the highest floor of a residential building, has long been synonymous with wealth and luxury.
But for affluent New Yorkers, the luxury penthouse apartment seems to be losing its allure.
New York City has a surplus of penthouses on the market, according to The Real Deal. There were 443 penthouses for sale in the city as of October 12, a 16% increase from the same time period in 2017. And 81 of those units are asking more than $15 million, The Real Deal reported.
"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."
Agents are increasingly willing to consider offers well below the asking price, Haber told The Real Deal.
"Any offer will be responded to," he said. "You didn't get that a year and a half ago."
Beyond oversaturation, the glut of penthouses may suggest that the way New Yorkers view luxury real estate is changing.
"Historically, penthouses have been the trophy property," Reba Miller, a broker at Berkshire Hathaway HomeServices, told The Real Deal. "Today, the trophy is many things. Not everyone needs a penthouse to feel like they got the trophy."
A penthouse in an older building might not attract buyers like a unit in a lower floor in a newer building with exciting amenities, according to Miller.
"You can go to many buildings, buy on a lower floor, and feel like you bought the penthouse," she said.
For Haber, penthouses haven't necessarily become less of a trophy - there are just too many of them.
"Penthouses aren't less prestigious, there's just so many more of them on the market today," Haber said. "As the days on market for apartments becomes longer, more penthouses are lingering. As a result, buyers have more penthouse options. Generally speaking, a penthouse means views, views, and more views."
But with some penthouses bearing outrageously high price tags, views may not always be enough.
To sweeten the deal for an $85 million penthouse in Manhattan's Hell's Kitchen neighborhood that's been on the market for at least two years, the building's president threw in perks that include a $1 million yacht, a one-year vacation rental in the Hamptons, two Rolls-Royce Phantoms, and even two tickets for a trip to outer space. It has not yet sold.
Some buyers may be confused these days about what even constitutes a penthouse.
A penthouse in New York City's tallest residential building has been listed for $82 million for least two years - and it's not even on the top floor. In fact, the top six floors of 432 Park Avenue are considered penthouse units because they have different layouts than the other floors and some units occupy an entire floor, a representative for the building told Business Insider.
"The days of the penthouse being the top floor are long gone," Haber said. "Developers have realized there is a premium to be paid for the top floors of a building to have the penthouse moniker." In some cases, an apartment is called a penthouse not because it's on the top floor, but because it has a different layout, higher ceilings, or other amenities that differentiate it from other units in the building, he said.
But even if a unit is not on the very top floor, buyers are attracted to the fact that higher floors tend to have fewer units, James Morgan, an agent at Compass, told Business Insider.
For others, the eternal draw will be "the exclusivity of pushing the only PH button in the elevator," Morgan said.