For years, Manhattan's real estate market has been stuck in a seemingly endless cycle of ever-rising buildings—and prices. One insanely expensive residential building rose over Midtown, and suddenly developers decided that they must follow suit, chasing ultra-wealthy (and occasionally shady) clientele who wanted to invest their riches into ultra-exclusive property.
But after several years of this race to the top of the real-estate market (and the construction of buildings like 432 Park Avenue, and the forthcoming 111 and 252 West 57th Street), there's a chance that things may be cooling off. The New York Times reports that the city "may be facing a luxury glut," with more supply than demand for these ridiculously pricey units. "There’s clearly some frothiness in the high-end residential market," deputy mayor Alicia Glen told the Times.
Some of the signs they point to as indicative of this potential glut:
- "There are at least 300 apartments in seven buildings priced at a billionaire-friendly $5,000 a square foot either for sale or scheduled to go on the market in the next 24 months," per the Times.
- The number of units sold in the upper-upper tier of the luxury market has dipped; only 47 were sold in 2015, compared to 55 in 2013.
- Units that are priced around $5,000 per square foot account for "less than 1 percent of condo sales," according to data compiled by CityRealty.
- Rents for retail spaces on Madison and Fifth Avenues have gotten as high as $2,000 per square foot, but some shopowners have balked at this uptick.
- And while NYC had a record 58.3 million visitors stream in and out of the five boroughs in 2015, hotel occupancy was only at around 85 percent, even as tens of thousands of new hotel rooms were added.
Does this mean that developers will cease and desist with the whole super-high-end-luxury trend anytime soon? Maybe: the Times points to the failed efforts to bring a 900-foot tower to Sutton Place, as well as Steve Witkoff's aborted plans to turn the Helmsley Park Lane Hotel into condos, as evidence of the cooling off. "I wouldn’t take a bet on doing a high-end condo building and trying to sell apartments at $5,000 per square foot," TF Cornerstone chairman K. Thomas Elghanayan told the Times.
But there are still a pelthora of high-end developments in the works—the mysterious 220 Central Park South, Extell's Central Park Tower, and Silverstein's 30 Park Place, to name a few—that are already asking (or are likely to ask) that high of a price. So at this point, it's a waiting game to see if those promised ultra-wealthy buyers will eventually bite.