When Anders Lindström went on the hunt for an apartment early this year, the Far West Side wasn’t a neighborhood at the top of his wish list. His goal was to find something in Chelsea, but the apartments were underwhelming given the high prices. Ultimately, he ended up at SKY, a massive 71-story luxury rental with 1,175 apartments. The location wasn’t well established, on West 42nd Street between 11th and 12th Avenues. But the building amenities proved impressive: two pools (with bar service), a gym, full-service doorman, billiards lounge, private park, basketball court and pet spa. “Being at the pool feels like staying at a luxury resort,” Lindström said. And when he thought back to signing a lease in a neighborhood that lacks the established amenities of Chelsea, he noted, “It’s more about the building than the area.”
SKY is one of a few luxury developments reshaping West 42nd Street. The tower sits next to Atelier, a 46-story luxury condo built in 2007. MIMA, a 151-unit luxury rental, opened at 450 West 42nd Street in 2012. Just this month, permits were filed to replace a seven-story hotel at 507 West 42nd Street with a 30-story apartment building boasting a long list of amenities. You could call West 42nd one of many emerging thoroughfares in New York that have attracted new luxury development—thoroughfares that, 10 or 15 years ago, would seem the unlikeliest places to lure deep-pocketed buyers. But as the real estate market booms and New Yorkers show willingness to live in less-established neighborhoods, developers are working overtime to build up these new posh hot spots.
Nowhere is this more striking than 57th Street, where ultra-tall, ultra-pricey skyscrapers planned for the block have earned it the nickname of Billionaires’ Row. While 57th Street is no Park Avenue, it’s got a lot going for it, explained Lauren Riefflin, a spokesperson with real estate website StreetEasy. “The area is surrounded by a lot of cultural options, and it’s close to Central Park,” she said. Most important, according to Riefflin, was the availability of air rights that allowed developers to build up to “record-breaking heights.” And as she put it, “High towers mean high asking prices.” The sales average of the block increased 625 percent from 2011 up to $10.39 million by the first quarter of 2016, due to sales at the skyscrapers One57 and 432 Park. There are two more uncompleted towers on the market, 220 Central Park South and 252 East 57th Street, while the planned tower at 111 West 57th will add 65 more condos to the mix.
There’s been much speculation about how much demand there will actually be for all these top-tier luxury apartments. But the wave of development (and the marketing surrounding it) has created a new image of what luxury looks like in New York for the 1 percent—and it’s not on the tony blocks of the Upper East Side: It’s on busy 57th Street. These emerging, unexpected locales have a lot to do with Manhattan running out of developable land and high land prices, said Andy Gerringer, managing director at the Marketing Directors. “It’s all about land values and where to buy affordable land,” he said. That’s paired with a focus on areas that are still “convenient to people and where they work.” When developers zone in on areas with that formula, development often booms.
The blocks directly around the High Line lived up to that formula well. Fifteen years ago, it was mostly warehouses surrounding an abandoned elevated railway. The neighborhood went through a zoning change in 2005 that allowed for new mixed commercial and residential development. On top of that, the popularity and marketability of the High Line park, as well as easy access to the subway, spurred “unparalleled real estate prices,” according to a recent report by StreetEasy. The median resale price directly around the first portion of the High Line was $2,143,287 in May of this year; this is over 100 percent more than the real estate value one block to the east and is over 75 percent higher than the rest of downtown Manhattan.
Despite a developer’s best efforts, there are often growing pains as a neighborhood like Downtown Brooklyn booms.
The success of areas like the High Line then creates a domino effect, as developers go off again searching for relatively cheap land in hopes that a new neighborhood will take off like its predecessor. As Riefflin put it, “Affordability is the ultimate driver to expanding horizons and finding new places to live.” This is the case along West 42nd Street—where Lindström ended up after he couldn’t afford Chelsea—and the area just north of it, the West 57th Street corridor. That block was just graced with starchitect Bjarke Ingels’ first North American building, the 709-unit rental VIA 57. (Construction was also made possible after a rezoning.) “We knew the design and the amenities would be a huge draw,” said David Neil, an officer with the Durst Organization, the developer of VIA 57. Stunning architecture, just like impressive amenities packages, is designed to boost a still-growing neighborhood and push prices up—and many buyers are willing to prioritize these factors when moving to a new neighborhood. “Residents are definitely drawn to a building when we’ve invested in the design,” said Dave Lombino, director of special projects at Two Trees. The development firm hired starchitect Enrique Norten to design the Mercedes House condo, located near VIA 57. “Design helps give the building a more pronounced identity,” Lombino said.
Lombino noted that transforming up-and-coming neighborhoods to more upscale destinations requires “a high degree of intervention [from developers].” That means building commercial space and bringing in destination-worthy tenants, not to mention basics like grocery stores and coffee shops. Take Downtown Brooklyn, an office hub that’s transformed into a residential hot spot since a 2004 rezoning. It’s one of the few Brooklyn neighborhoods that “made sense to build very tall and very dense,” said Alexander Maroni, a Douglas Elliman broker who specializes in the area. But it lacks the cultural cache and quaint main drags of its brownstone neighbors.
The developers of City Point, a 1.7 million-square-foot mixed-use project there, decided not just to build residential units but also retail, entertainment space and a food hall to appeal to new residents. “We feel that a sense of place will resonate with the people coming to the neighborhood,” said Christopher Conlon, COO of Acadia Realty Trust, one of the City Point developers. Developers are banking on the appeal of food to create that neighborly vibe: “We made a decision to activate the lower level [of the commercial building] to include mostly food, because there were not enough options for new people coming in.”
Despite a developer’s best efforts, there are often growing pains as a neighborhood like Downtown Brooklyn booms. Chris Webb Young moved there with his family six years ago, when it was still “a bargain…and it was centrally located among many family-friendly neighborhoods.” But with an influx of families moving there, he has spent the past several years urging the city to build a school nearby. “The city wasn’t even aware of how large the population boom was,” he said. And there are many more units to come, with new development looking more and more upscale. (This year, two developers announced plans to build Brooklyn’s first super-tall residential skyscraper at 340 Flatbush Avenue—Maroni said Flatbush was “like the 57th Street of Brooklyn.”) “The next wave of development, the skinny tower, is following what’s already happened over the past three or four years,” said Webb Young. “Pretty soon, Downtown Brooklyn will no longer be a value. It’ll just be an alternative to Manhattan.” There’s hope the city will strike a deal with one of the incoming developers to include a school in their building. The city also announced it would add 2,000 more school seats to two schools planned for nearby neighborhoods.
Sienam Lulla is another New Yorker who’s watched her neighborhood—the Financial District—explode into an unexpected luxury hot spot. “I really feel that this year has brought breathtaking change,” she said, listing high-end projects like the skinny condo tower 30 Park Place, the conversion of the abandoned Beekman building into a condo/hotel and the Woolworth Building project, where a penthouse is asking $110 million. As a broker with Compass, she has noticed the switch from buyers who came for a deal, to buyers “from neighborhoods they have never come from before…the Upper East Side, Upper West Side.” Lulla recently helped form the Financial District Neighborhood Association to address the transition. “This used to be a neighborhood of vacant offices, land and abandoned tourist attractions,” she said. “Now, there’s not enough sidewalk for everyone.”