Last September, when Woody Allen placed his 40-foot-wide Georgian townhouse on the market for $27 million, Manhattan brokers balked at the stratospheric sum he demanded for his lavish Carnegie Hill residence; a New York Post headline screamed “BANANAS!” But in the past two months, Mr. Allen has turned down two successive offers-for $23 million and $20 million, respectively-on the 22-room mansion on East 92nd Street that he shares with his wife, Soon-Yi, according to a real-estate source familiar with the property.
After nearly three years of declining prices at the highest echelons of Manhattan real estate, Mr. Allen’s resolve to get top dollar is a sign of the rapid change in the luxury market since the end of 2003. The number of apartments and townhouses now for sale in Manhattan’s toniest corridors-West End Avenue and Riverside Drive, Central Park West, Fifth and Park avenues from 59th Street to 96th Street-have plummeted to record lows, causing prices to quickly skyrocket again. In the space of a few weeks at the beginning of this year, the volatile market is once again dominated by sellers able to command record prices.
Mr. Allen didn’t return calls for comment about his efforts to unload his ornate double-wide limestone mansion. Alice F. Mason, of the exclusive, eponymous Upper East Side brokerage, who is representing Mr. Allen’s property, didn’t return calls for comment.
But to those who make their living developing or selling places as lavish as Mr. Allen’s, the signs are unmistakable.
“The market is the best I have seen it in years. The best market was the year before 9-11, and this market blows that away,” said Donald Trump, the star of NBC’s reality hit The Apprentice , whose Upper East Side development at Park Avenue and 59th Street is now more than 50 percent sold after opening for sales in November. “I see prices going up, there is just very little good product available. There is a lot of mediocre product available-product that tries to be good. But it’s not good,” he said.
Buildings that once reliably provided options for well-heeled Manhattan house-hunters are hanging out the “No Vacancies” shingle. On Fifth Avenue, there are no listings at Nos. 1020, 998, 960, 834 or 820. On Park Avenue, the same crunch prevails, with no listings at Nos. 812, 775, 770, 765 or 660.
Statistics from a market report issued in February by the Corcoran Group showed that available listings at the start of 2004 had plummeted by 50 percent compared to the same period in 2003.
“We’re seeing an uptick in our open-house attendance, and we’re practically bursting at the seams with buyers. There aren’t enough listings to accommodate them,” said Scott Durkin, the chief operating officer of the Corcoran Group.
Of course, it’s always in a brokerage’s interest to indicate a skyrocketing market. But while Corcoran issued the most optimistic numbers, which some real-estate experts contend overstate the inventory crunch, other firms show a similar drop in listings. A report issued by Miller Samuel Inc., an independent Manhattan real-estate appraisal firm, compared available inventory in the luxury market in January of 2003 to the same month in 2004 and found a 29 percent drop in the number of listings. In the fourth quarter of 2003 alone, the report showed, available listings decreased 19 percent.
“The record prices are really telling,” said Jonathan Miller, the president of Miller Samuel, who issued the report. “We’re in a sellers’ market, and the lack of available apartments just makes it more of a sellers’ market.”
Properties are selling faster, too. According to Mr. Miller, in 2003, the average Manhattan listing in the overall market sat for a period 11.9 percent shorter than the year before; and rapidly selling properties, the report found, are closing at asking prices or above.
Between 2002 and 2003, the average discount below asking price dropped by nearly 50 percent, and today, the average apartment in the whole market is selling for only 2.9 percent below the asking price. Bidding wars, so familiar during Manhattan’s dot-com bubble, have once again become common practice for those desperate to buy.
The current stampede to buy luxury properties on the Upper East Side and West Side of Manhattan finally signifies that in moneyed circles, New York has shrugged off the last vestiges of the Sept. 11 economic slumber that shuttered the last real-estate boom in 2000. On the afternoon of Feb. 17, the Dow surged more than 100 points and closed at a 32-month high, nearing the 11,000 mark. In 2003, Wall Street doled out more than $10 billion in bonuses to employees, who in turn made sure there was always a crush at the latest trophy apartment to hit the open-house circuit.
“There is no question about the arc of the last year. We’ve gone from a flood of inventory, with a relative scarcity of available buyers ready and willing to purchase, to a flood of buyers and a relative scarcity of attractive inventory,” said Frederick Peters, the president of Warburg Realty Partnership, a firm with 85 brokers. “It’s been a fairly astonishing transition in what is, historically speaking, a short period of time.”
Given the improved selling conditions, will Mr. Allen’s confidence prompt other trophy homeowners to once again lob their stratospherically priced mansions on the market? The stakes involved in Mr. Allen’s success are high, given that a serious line-up of potential sellers remain who are all watching what happens with his property. In 2003, Seagram heir Edgar Bronfman Jr. took his $40 million townhouse on East 64th Street off the market, as did hotelier Ian Schrager, who pulled his $15.9 million co-op on Central Park West out of the luxury-property pool. Other dropouts in 2003 included Dustin Hoffman’s $25 million triplex co-op on Central Park West; fellow Seagram clan member Matthew Bronfman’s $27 million townhouse on East 67th Street; and art dealer Guy Wildenstein, who failed to nab $35 million for his limestone mansion, which sits next to the Bronfman estate at 11-13 East 64th Street. Whether these gilded residences return to the market will shape Manhattan luxury real estate in 2004.
My Doorman, My Broker
Even with shining new construction popping up around the prewar limestone façades, such as the crystalline Time Warner towers or One Beacon Court, these luxury developments aren’t bringing significant numbers of apartments to the market; the $1.7 billion Time Warner Center only offers 225 new apartments.
“There are $15-to-$20-million customers who have nothing to purchase,” said Laurence Kaiser, the president of Key-Ventures Realty, an exclusive Upper East Side real-estate firm.
“There are less apartments per buyer on the market than I’ve ever seen. You have to find out what’s coming on before it’s on. I had people stopping at my own building and asking the doorman, ‘Is anyone moving?'” said Michele Kleier, the president of Gumley Haft Kleier, an Upper East Side brokerage. When one of Ms. Kleier’s listings-a nine-room apartment at 1125 Park Avenue-recently hit the market for $5.9 million, the doorman received three frantic messages from prospective buyers who wanted to tour the property. At another 13-room apartment that Ms. Kleier represented, the owners weren’t moving out until the end of this year, but the buyers, who lived across the street, heard about the move and agreed to take the spread for more than $6 million, even though they’d have to wait more than six months to move in.
In the luxury-townhouse market, inventory has also reached historically low levels.
“I don’t have one townhouse for sale. In the past four months, I had six houses for sale ranging from $5 million to $20 million. All of them sold,” said Richard Steinberg, a managing director of Warburg Realty Partnership. At 12 East 73rd Street, between Fifth and Madison avenues, Mr. Steinberg unloaded a 22.5-foot-wide townhouse that was listed for $18.5 million, and there were three buyers vying for the 11,500-square-foot mansion.
On Feb. 17, Sean (P. Diddy) Combs suddenly sold his ornate, 15,444-square-foot townhouse at 813 Park Avenue-after repeated attempts during the past four years to unload the 12-story spread at different prices as low as $12 million-for $17 million, a full million dollars more than he was asking. (The full story is reported in this week’s Manhattan Transfers column.)
On the West Side, where recent sales included Harrison Ford’s $11.5 million duplex at 101 Central Park West, and Robbie Browne of the Corcoran Group’s record closing on the $45 million penthouse at the Time Warner Center, the market is on par with the Upper East Side.
“I’ve had six closings already in 2004, and my production in 2004 has already exceeded all of 2003,” said Daniel Douglas, an executive director at the Corcoran Group who is the firm’s top-selling West Side broker. Last week, Mr. Douglas closed on a townhouse in the 80’s just off Central Park West and had multiple bids on the property’s $3 million asking price. At 101 Central Park West, the 15th-floor apartment next to Mr. Ford’s duplex is currently listing for $9.875 million, and Mr. Douglas has shown the apartment nine times in the past week.
“There’s a shortage of properties, and right now it’s more acute. Since the holidays, there’s been a sea change,” Mr. Douglas said.
Watching and Waiting
At the highest end of the price scale, where Mr. Allen is trafficking his 22-room mansion, many of the exclusive properties that hit the market after the Sept. 11 downturn have been snatched up. In September, former Sony Music chief Tommy Mottola finally unloaded his 11,000-square-foot triplex at 9 East 64th Street for close to $20 million, after the apartment sat on the market for a little less than a year. In September, Vornado Realty chairman Steven Roth nabbed the late Gianni Agnelli’s estate at 770 Park Avenue, where David and Lisa Schiff (the parents of Karenna Gore Schiff’s husband, Andrew) and Michael Lynne, co–chief executive officer of New Line Cinema, live. Brokers say the property traded at close to the $25 million asking price. At 4 East 66th Street, the regal home of the British consul general, Sir Thomas Harris, and his wife recently traded for $12.5 million. And in October, oil billionaire David Koch and his wife purchased the duplex at 740 Park Avenue formerly owned by the Japanese consulate for $17 million.
The diminishing pool of available luxury homes may be fueling Mr. Allen’s confidence that he can unload his mansion at or close to his lofty asking price, which would be a record for an apartment sold that far north (Mr. Allen’s townhouse is on 92nd Street, on the corner of Madison Avenue). But some brokers say that Mr. Allen may be exhibiting hubris in turning down two significant offers.
“He rejected $23 million and $20 million. He should have grabbed it,” said one broker familiar with the proceedings. “Is someone going to be up on 92nd Street and pay that kind of money? It’s family land up there, but generally family people don’t have that kind of money,” said the source.
And not all real-estate watchers are convinced that the shortage is as acute as the market reports state.
“These numbers aren’t alarming to me. There is a decline of listings out there, but it doesn’t look like 50 percent,” said Paul Purcell, the former president of Douglas Elliman, who now runs the relocation firm Braddock and Purcell. “All of us know it’s an extremely active market, and if priced correctly, properties are selling in a rather short time period. But we seem to be replenishing the supply.” And with the Arctic New York winter finally abating, some experts say that owners will put apartments on the market this spring in a more auspicious selling environment, which will assuage the inventory crunch.
“In 2002 and 2003, we saw rising inventory that began in March and continued through the spring. The second quarter is historically the quarter with highest volume and highest prices achieved,” Mr. Miller said. And although Wall Street is on a hot streak, some fundamental economic uncertainties-including lackluster job creation, a massive $489.4 billion trade deficit, and the potential for interest-rate hikes and unpredictability going into a contentious Presidential election season-may restrain the luxury market on the Upper East and West sides from fully topping the bubble year of 2000.
So far, though, it doesn’t look that way to brokers.
“You hope when a new exclusive comes on, it’s a friend who will let you in early so you can see it,” said Ms. Kleier. “Luckily, I have a lot of friends in the business.”